Germany is grappling with 'extreme economic uncertainty' that has never been as high as currently measured. This is evident from the Economic Policy Uncertainty Index maintained by researchers from Stanford University and the Kellogg School of Management.
Germany was the first country to breach the 1,000-point threshold on the uncertainty index in November 2024. Around the elections in February, the German score dropped significantly to 839 points, but in March, the index rose again to 1,057 points. The index tracks thirty other countries regarding economic uncertainty, including Turkey, Greece, the UK, and Brazil. However, none of these countries come close to the extreme uncertainty faced by Germany.
According to researchers from the Kiel Institute for the World Economy, the high uncertainty in the German economy is reflected in the country's GDP. 'If the uncertainty about economic policy in Germany had developed in line with the rest of Europe since early 2021, the German GDP would have grown significantly more favorably,' the researchers write. Germany could have seen up to 2% more growth.
