German Economic Council significantly revised up growth forecast, says chair

Germany's ​Council of Economic Experts significantly ​revised up its growth ‌forecasts for Europe's ​largest economy thanks to a quicker-than-expected recovery from the energy shocks created by the Iran war, said council ‌chair Monika Schnitzer on Wednesday.

"We are seeing a clear economic upturn, driven by surprisingly strong exports and high levels of government spending," she said while handing ‌the council's annual report to Chancellor Friedrich Merz, without giving the exact ‌figures. Merz said that the council had revised its forecasts to around 1%, an upswing that is expected to continue into the coming year in an encouraging sign for households and ⁠firms.

"Given ​the many crises ⁠in Germany, we didn't necessarily expect to be able to pull that off," he said. Alongside ⁠record spending on infrastructure and defence, Merz has pledged structural reforms to safeguard public finances, ​including an overhaul of the pension system.

However, Schnitzer warned that ⁠the experts had found that the federal government's projected revenue would not be enough to cover ⁠its ​planned expenditure in the long term. Reversing the government's reliance on debt financing will necessitate difficult decisions, a situation that is little affected by the ⁠economy's relatively robust state, she added.

Merz said that his government was fully ⁠aware of ⁠the challenges facing the country that require funding and would do everything in its power to maintain its top AAA ‌credit rating.