Friedrich Merz targets 1% growth to stabilize German economy

The ambitious target arrives as the coalition faces mounting pressure from declining poll numbers and a surging far-right challenge in upcoming state elections. Despite recent cabinet friction, Merz insisted that his government remains unified. He pointed to second-quarter expansion and a recovery in business morale as concrete evidence that the tide is turning for Europe’s largest economy.

While the economy ministry previously slashed its 2026 growth forecast to 0.5% due to energy costs stemming from the conflict in Iran, the leadership remains optimistic. Beyond domestic recovery, Merz has instructed federal ministers to draft new proposals aimed at recalibrating trade imbalances between the European Union and China, signaling a broader attempt to protect German industrial interests.