Economy in crisis: stagnation expected – unemployment rising!

Economy in crisis: stagnation expected – unemployment rising!

A gloomy forecast for the German economy: According to the current winter forecast from the Kiel Institute for the World Economy (IfW Kiel), economic growth will stagnate in 2025. Private consumption, which rose 1.3 percent this year, is expected to decline. Calculations show that construction investments will decrease significantly from 2024 to 2025 and have fallen by around 15 percent since 2020. This will lead to rising unemployment as the number of unemployed has increased by 370,000 since summer 2022, which could increase the unemployment rate from 6 percent to 6.3 percent in the coming years, as ifw-kiel.de reported.

Measures to combat the shortage of skilled workers

In order to meet these challenges, several initiatives to improve the labor market situation have been presented. Particular emphasis is placed on the need to facilitate access for foreign skilled workers. Based on the Western Balkans regulation, the number of admitted workers could increase to up to 75,000 per year. This increase is aimed at covering shortages in many professions, particularly in healthcare. The various measures could integrate up to 150,000 additional people into the labor market vfa.de determines. The overall tense labor market environment requires urgent and comprehensive reforms to ensure positive development.

The combination of stagnant growth, rising unemployment and necessary reforms in the employment sector represents a challenge for the next federal government. In the current situation, a financial deficit of an estimated 5 to 20 billion euros is expected in the coming years and could lead to further strains on the state budget, which underlines the need for a strategic political realignment.