Despite a slight rise in GDP attributed to increased private consumption and investments, the unemployment rate has reached a decade high, highlighting ongoing labor market challenges.

Inflation in Germany has decreased to 2.2% in April 2025, supporting the case for potential interest rate cuts by the European Central Bank.

Katherina Reiche has been appointed as the new Minister of Economics, tasked with revitalizing the economy amid these challenges.

The recent GDP increase is primarily attributed to higher household consumption and capital formation compared to the previous quarter.

The German economy has shown slight growth in the first quarter of 2025 after two years of recession, but future prospects remain bleak due to ongoing U.S. trade policies.

Trump's extensive tariff measures have created significant uncertainty for trade partners and financial markets, adversely affecting the global economy.

The incoming government plans to implement measures such as tax cuts, reduced energy costs, and regulatory reforms to stimulate economic growth.

The hope for economic improvement hinges on resolving the trade dispute with the U.S., as the EU has suspended planned tariffs in anticipation of negotiations.

As a major exporting nation, Germany is particularly vulnerable to these tariffs, with more than 10% of its exports, valued at over 161 billion euros, directed to the United States in 2024.

A new conservative-led coalition government is preparing to take office, prioritizing economic revival and potentially boosting consumer confidence.

Overall, the outlook for 2025 remains pessimistic, with the risk of a third consecutive year of economic stagnation looming.

The Ifo Institute warns that the German economy could contract again as early as summer 2025, influenced by recent tariff increases.