The review of growth forecasts
The German government recently announced a revision of its economic growth forecasts for 2025, reducing the estimates from 0.3% to the previously expected 1.1%. This decision reflects the economic difficulties the country is facing, after suffering two consecutive years of recession in 2023 and 2024. The Minister of Economy, Robert Habeck, described the situation as a real stagnation, underlining the uncertainty surrounding the economic and commercial policies of the new Trump administration in the United States
.
The causes of economic stagnation
Economic stagnation in Germany is not a recent phenomenon; it began in 2018 and continues to represent a significant challenge for the German economy. Geopolitical uncertainties, market fluctuations and unstable trade policies have helped to create a climate of distrust among investors. In addition, the COVID-19 pandemic has had a devastating impact on many sectors, further aggravating the economic situation. German companies are now faced with rising costs and weak domestic demand, factors that limit their chances
of recovery.
Impact on mortgage applications in the United States
In parallel with the situation in Germany, the United States is also experiencing a decline in mortgage applications. According to data from the Mortgage Bankers Association (MBA), mortgage applications registered a 2% decrease in the week to January 24. This decline follows a slight increase of 0.1 percent from the previous week. Refinance requests fell by 6.7%, while new applications saw a decrease of 0.4%. Thirty-year mortgage rates remain stable at 7.02%, but the decrease in requests could indicate a growing concern among consumers about
economic stability.
Monetary policies in response to the crisis
In response to these economic challenges, the Bank of Sweden recently reduced its reference rate by a quarter of a point, bringing it to 2.25%. This decision was taken to counter the risk of excessive inflation, in a context of weak growth. Also in Spain, GDP grew by 0.8% in the fourth quarter, exceeding analysts’ estimates and reaching +3.2% in 2024. These data suggest that, while some European countries are showing signs of recovery, Germany continues to struggle to find a clear direction for its economy
.