IMK economist Breuer sees German economy burdened primarily by international tensions

The most recent data from the Federal Statistical Office are overall subdued according to Breuer. While individual indicators such as industrial orders and certain sector reports pointed to a slight recovery, overall growth remains very weak. The Bundesbank had likewise recently pointed to the persistent growth weakness burdening Germany for several quarters. Compared with Great Britain and the United States, which recently posted somewhat stronger gains, Germany's mini growth continues to fall short of expectations.

Iran conflict weighs on energy and commodity markets

At the same time, the conflict with Iran is having an effect through the energy and commodity markets. Rising energy prices and supply chain uncertainties are burdening industry and export-oriented medium-sized businesses in particular. A farm in the Upper Palatinate in Bavaria and other small businesses are feeling the higher input costs directly, adding to the pressure on domestic economy.

Against this backdrop, the announced reform package is gaining significance. It contains measures to reduce bureaucracy, stabilize social contributions, provide tax relief for citizens, and promote future-oriented industries. Economists like Breuer see this as a sound approach but emphasize that its impact will only take effect with a delay and that businesses primarily need planning certainty in the short term.

Reform package aims to strengthen domestic economy

Breuer also called on the federal government to specifically strengthen domestic demand. This includes investments in infrastructure, a reliable energy policy, and relief on non-wage labor costs. Only in this way can Germany catch up internationally and move its mini growth onto a more stable upward trajectory.

Consumers in Germany are also a focus. For many households, high prices for energy and food have eroded purchasing power. Relief through lower social contributions and targeted tax measures could, according to the IMK's assessment, help restore private consumption as a pillar of the economy.

For the coming months, economists expect a slightly positive trend, provided no further geopolitical shocks occur. The ifo Institute and other research institutes are observing a cautious brightening of business expectations, particularly in mechanical engineering and the electrical industry. The decisive factor will be that the announced reforms are implemented swiftly to reduce uncertainty among businesses and employees.

Outlook: cautious optimism despite risks

The Iran conflict remains a central risk factor for the German export economy. If tensions escalate or new sanctions further burden energy markets, a setback for the already fragile recovery threatens. At the same time, according to Breuer's assessment, the situation also opens up opportunities, for instance if European companies diversify their supply chains and rely more strongly on domestic production.

Overall, economic experts paint a cautiously optimistic picture. The mini growth is not a breakthrough, but a sign that the trough may have been reached. With the reform package and a determined stabilization of domestic demand, there is an opportunity to gradually put the German economy on a more robust growth path.

Breuer emphasized in conclusion that economic policy confidence and reliable framework conditions are now decisive. "The German economy has a strong industrial base and highly qualified employees," he said. These strengths must now be supported by clear political decisions so that the current mini growth can become a sustainable recovery.