BERLIN, Jan. 6 (Xinhua) -- German Chancellor Friedrich Merz said restoring economic growth will be the government's main priority in 2026, after acknowledging that earlier steps have not been enough to strengthen Germany's competitiveness.
In a letter sent at the start of the year to members of his governing coalition, Merz described the economic outlook as "very critical in some areas," according to a document cited by German news agency dpa.
In 2026, Germany would need to focus on decisive political and legislative action to substantially improve conditions for businesses, Merz wrote, stressing that only then could the economy return to growth.
Germany's economy shrank in both 2023 and 2024. Winter forecasts released in December 2025 by several major German economic institutes projected growth of just 0.1 percent in 2025, pointing to weakening external demand, including a marked fall in exports to the United States.
Analysts said Germany's recovery had long faced headwinds from high energy costs, weak global demand and slow structural reform, with U.S. tariff hikes in 2025 adding further strain on exporters.
Since taking office in May 2025, Merz has pledged to revive Europe's largest economy through large-scale public spending and increased investment in defense and infrastructure. His government has acknowledged that recovery will take time and has rolled out tax cuts and other reforms, though business groups say the pace of change remains too slow. ■