The Munich-based institute in southern Germany explained that even the expected recovery in 2026 will be weaker than previously thought, according to its experts’ new estimates.

The institute expects Europe’s largest economy to achieve a slight growth of 0.2 percent this year, which is 0.1 percentage points lower than the forecast made in summer.

The institute added that its calculations indicate a possible increase in the number of unemployed in the country by about 155,000 people, raising the unemployment rate to 6.3 percent.

It also lowered its forecast for the German economy in 2026 by 0.2 points to settle at 1.3 percent.

It is worth noting that the German economy recorded a contraction over the past two years.

Economic experts believe that Germany’s success in sustainably overcoming the prolonged economic weakness depends largely on the coalition government in Berlin.

Timo Wollmershäuser, head of economic forecasts at the institute, said: “The measures taken by the federal government in economic policy will likely start to show their effects from next year.”

He added that fiscal policy, if applied diligently and convincingly, can help pull the German economy out of its crisis, “but if the deadlock in economic policies continues, it threatens Germany with additional years of economic paralysis and erosion of the country’s status as a business hub.”