Germany needs to take more risks and boost its stagnant economy with a decade of investment in infrastructure, German Minister for Economic Affairs and Energy Katherina Reiche said Friday.
“The next decade will be the decade of infrastructure investments in bridges, in energy infrastructure, in storage, in maritime infrastructure… telecommunication. And for this, we need speed. We need speed and investments, and we need private capital,” Reiche told CNBC’s Annette Weisbach on the sidelines of the Tegernsee summit.
“This country needs an economic turnaround. After two years of recessions the previous government had to announce again [a] zero growth year for 2025 and we really have to work on this. So on the top of the agenda is an investor booster,” the minister added.
Germany’s economy contracted slightly on an annual basis in both 2023 and 2024 and the quarterly gross domestic product has been flipping between growth and contraction for over two years now, just about managing to avoid a technical recession. Preliminary data for the first quarter of 2025 showed a 0.2% expansion.
Forecasts do not suggest much of a reprieve from the sluggishness, with the now former German government last month saying it still expects the economy to stagnate this year.
This is despite a major fiscal U-turn announced earlier this year, which included changes to the country’s long-standing debt rules to allow for additional defense spending and a 500-billion-euro ($562.4 billion) infrastructure package.
Several of Germany’s key industries are under pressure. The auto industry for example is dealing with stark competition from China and now faces tariffs, while issues in housebuilding and infrastructure have been linked to higher costs and bureaucratic hurdles.
Trade is also a key pillar for the German economy and therefore uncertainty from U.S. President Donald Trump’s changing tariff policies are weighing heavily on the outlook.
This is a developing story, please check back for updates.
