Germany's Economic Growth Forecast Lifted Due to Fiscal Boost
Goldman Sachs and Nomura have lifted their expectations for Germany's economic growth in 2025 due to increased military and infrastructure spending, which is expected to boost the country's economy and have spillover effects on its European neighbors. Goldman expects a 0.2% growth rate for Europe's largest economy, up from 0.8%, while Nomura predicts a pace of euro area economic growth could be lifted by 0.2 percentage points per quarter by the end of 2026. The fiscal news is also expected to lower pressure on the European Central Bank to reduce rates below neutral.
- The significant boost in military and infrastructure spending in Germany may lead to a shift in the global economic landscape, with potential implications for trade flows, foreign investment, and economic growth in other countries.
- Will this increase in government spending have a disproportionate impact on the already strained public finances of smaller European nations, and could it exacerbate existing fiscal imbalances?