It is essential that Germany embark on a period of economic growth, the country’s finance minister Jörg Kukies told CNBC on Thursday, adding that structural weaknesses must be addressed.
“We’ve just revised the growth forecasts for the IMF again,” Kukies told CNBC’s Karen Tso and Steve Sedgwick at the World Economic Forum in Davos.
“The structural weaknesses of our economy absolutely must be addressed,” he added. “It is really important that we enter the path of economic growth.”
Germany’s annual gross domestic product fell in 2023 and 2024. Quarterly GDP readings are also muted, but the economy has so far avoided a technical recession.
The International Monetary Fund (IMF) is currently forecasting GDP growth of 0.3% in Germany for 2025 and 1.1% for 2026, according to the January update of the World Economic Outlook. It marked a sharp drop from the October forecast for growth of 0.8% in 2025.
‘Targeted reforms’ to curb debt
Kukies also addressed the debate over Germany’s so-called debt curb, a fiscal rule enshrined in the German constitution. The debt brake limits how much debt the government can take on and dictates that the size of the federal government’s structural budget deficit cannot exceed 0.35% of the country’s annual gross domestic product.
The finance minister said some “targeted reforms” of the rule were necessary “because we need so much infrastructure spending on rail, on roads, on bridges, on education, on 5G, 6G infrastructure etc.”
“But the vast majority of investments […] in our country it must come from the private sector”, he added, saying that the right incentives are needed for private investors to “rediscover Germany”.
Kukies said German companies were still “very good” when it comes to their global businesses – which is reflected in their share price performance – but were “under stress” domestically.
“So that’s the problem we have to fix,” he said. We just have to offer them better conditions to invest and do research and development in Germany.
Kukies became Germany’s finance minister in November, taking over from Christian Lindner, who was fired by Chancellor Olaf Scholz after months of infighting over the economy and the budget.
Lindner’s dismissal effectively ended the former German governing coalition, which consisted of Scholz’s Social Democratic Party, Lindner’s Free Democratic Party and the Green Party. This, in turn, moved Germany’s national elections forward to February 23.
“Elections are about the economy,” Kukies added.
Closer trade ties with the US?
In response to President Donald Trump’s repeated threats to impose tariffs on imports from the European Union to the US, Cookies said communication was essential.
“I have been active in the government under the Trump and Biden administrations, and we have had very close dialogue with the American administration in both cases,” he noted.
The idea of tariffs has been met with widespread concern by European leaders about what they could mean for economies in the region. Germany is seen as particularly vulnerable as trade is a mainstay of the country’s economy; The US is the largest export trading partner, according to the country’s statistics office Destatis.
Kukies said on Thursday that Germany’s vulnerability to tariffs was “natural” given the economy’s exposure to trade, but suggested that trade relations with the US could become even stronger.
“I think, and some of the statements we’ve heard also indicate, that there is also an interest in strengthening trade ties, because both the US and Germany have a lot to offer each other in terms of energy, digital services. machinery, cars,” he said.