OECD shows Germany a way out of the economic downturn

According to the Organization for Economic Cooperation and Development (OECD), the new German government will only be able to end the economic downturn with decisive reforms. More speed is needed here, the OECD emphasizes in its country report for Germany . Funds must be used more efficiently. Furthermore, incentives should be created to attract more people—especially women—into the labor market, including through the immigration of skilled workers. Starting a business must be made easier, the organization stated.

Overall, there are too many bureaucratic hurdles in Germany. This leads to less economic dynamism. The OECD also identifies a greater need for reform in the German pension system. Incentives for early retirement must be phased out; instead, incentives for longer working hours are needed. According to the OECD, there is room for improvement in the digitalization of public administration and the healthcare sector in Germany.

Rich: "We need growth again"

At a joint press conference with OECD Secretary-General Mathias Cormann in Berlin, Federal Minister for Economic Affairs and Energy Katherina Reiche pointed out that the coalition of the conservative CDU/CSU and the Social Democrats (SPD) had already initiated many measures in this direction. "We need growth again." To achieve this, the competitiveness of the location must be improved. Germany must do its "homework," for example, by lowering taxes and energy prices, Reiche said. Labor costs are also too high for companies.

When asked, Cormann declined to comment on where the German government was failing to address problems. The Australian politician of Belgian origin emphasized that he was very satisfied with the response from Reiche and the entire government.

OECD forecast gives hope

The German economy, which Cormann described as a "heavyweight with enormous potential," has been in recession for two years. The Organization for Economic Cooperation and Development expects growth of 0.4 percent this year, and then, according to its forecast, 1.2 percent in 2026.

The OECD expects stimulus from rising investment and private household consumption. However, the export situation is likely to remain challenging given the simmering trade dispute with the United States. A decline of 0.3 percent is expected in 2025, followed by an increase of 0.6 percent in 2026.

wa/ch (rtr, dpa)