Germany’s economic troubles deepen as the ruling coalition disintegrates, exacerbating issues like shrinking investment and consumer confidence. Chancellor Olaf Scholz dismissed Finance Minister Christian Lindner, signaling a potential snap election. Germany’s economy, already struggling with high energy costs and lagging EU growth since 2018, is expected to contract for a second consecutive year, making it the worst performer in the G7. Compounding concerns, Donald Trump’s U.S. election victory raises fears of potential trade conflicts that could further harm Germany’s export-driven economy. While upcoming elections in March offer hope for economic stability, current polls suggest difficulties in forming a stable coalition. Short-term economic policy paralysis may delay the 2025 budget, impacting new projects. Scholz faces pressure to negotiate with opposition CDU leaders to support growth measures amid escalating trade tensions. Experts predict continued contraction, though a fresh government might eventually revive growth.

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