German Chancellor Merz recently stated in a letter to members of the governing coalition that the economic situation in Germany is “extremely dire” in certain areas, and that boosting the economy should be the top priority in 2026. In the letter, Merz noted that the policy measures taken so far have not sufficiently enhanced the competitiveness of German businesses. He called on the government to take decisive political and legislative action to tangibly improve the business environment and drive economic growth. Analysts point out that the German economy has long faced challenges such as high energy prices, weak global demand, and slow progress on structural reforms. In 2025, factors such as U.S. tariff hikes placed new pressure on exports, further complicating Germany’s economic recovery.