Economic Experts Warn of Uncertainty Amid Global Trade Tensions
Clemens Fuest, the head of the Ifo Institute, has emphasized the need for fundamental reforms to ensure the German economy’s resilience in the face of upcoming challenges. According to Fuest, additional growth requires not only more work but also more intelligent work, prompting the need for bureaucratic streamlining and better incentives for employment.
While the Ifo Institute’s optimistic forecast is tied to a significant uncertainty, Fuest highlighted the unpredictability of the US trade dispute and its potential impact on the global economy. The institute’s calculations are based on the assumption that there will be no further changes to tariffs by 2026 and that the situation with Trump will improve. However, Fuest stressed that this is not a reliable assumption.
In the event of a 50 percent tariff increase for the EU, as repeatedly threatened by US President Trump, the Ifo Institute’s head warned that the current upswing would be largely undone, leaving the German economy in a state of stagnation.