German economy in 'deepest crisis' of post-war era: industry group

FRANKFURT, Germany: Germany’s economy is suffering its “deepest crisis” since World War II, an industry group warned Tuesday, calling on Chancellor Friedrich Merz’s government to take urgent action to spark a revival.

Europe’s biggest economy “is in free fall, but the federal government is not responding decisively enough,” said Peter Leibinger, president of the Federation of German Industries (BDI).

Predicting that industrial production will fall in 2025 for the fourth year in a row, the BDI warned this is “not a temporary economic dip — but a structural decline”.

The German economy is facing a perfect storm: high energy costs burdening manufacturers, weak demand for its exports in key markets, the emergence of China as an industrial rival, and the US tariff onslaught.

It has suffered two years of recession and is forecast to eke out just meagre growth in 2025.

Merz, who took power in May, has pledged to revive the economy but is facing growing criticism that his government’s efforts are moving too slowly and are ineffective.

Leibinger charged that the coalition was “not responding with sufficient determination”.

“Germany now needs an economic policy turnaround with clear priorities for competitiveness and growth,” he added.