ISTANBUL
German Chancellor Friedrich Merz said Wednesday that the country’s economy is growing again after three years of recession and stagnation, despite wars in the Gulf and Ukraine as well as global trade disputes.
“The underlying economic data support this optimism. The business climate index rose surprisingly strongly in August,” Merz told a news conference following a two-day Cabinet retreat at Schloss Neuhardenberg in Brandenburg.
“The recession will have been overcome by the end of the year. We are already growing at good rates in the third quarter,” he said.
“We have three years of recession behind us, and now we are growing again — despite the war in the Gulf, the war in Ukraine and the trade conflicts.”
Merz said forecasts for 2027 were being revised upward, adding that Germany had an opportunity to record economic growth of at least 1% next year.
“Without work and growth, everything else is meaningless. Therefore, our full focus is on growth, jobs and innovation,” he added.
Germany’s Ifo Business Climate Index rose 2.1 points to 88.8 in August, marking its fourth consecutive monthly increase and reaching its highest level in a year.
The German economy expanded 0.3% in the second quarter from the previous three-month period. Europe’s largest economy contracted in 2023 and 2024 before stagnating last year.
Early retirement reform
Merz said the coalition remained committed to eliminating incentives for early retirement, including the option commonly known as “retirement at 63.”
He expressed surprise at criticism from the state premiers of Saxony, Saxony-Anhalt and Thuringia but said hardship cases and special circumstances would be considered.
Finance Minister Lars Klingbeil said investments financed through the government’s €500 billion ($583 billion) special infrastructure and climate fund were essential to the recovery.
Without the additional borrowing and investment, Germany would still be in recession, he said.
Merz also said the government would review and better coordinate its climate adaptation and heat-protection programs following extreme temperatures during the summer.
