By Maria Martinez

BERLIN (Reuters) -The German economy is expected to stagnate this year after two years of contraction, with tepid growth of 0.7% forecast in 2026, the German Chamber of Commerce (DIHK) said on Thursday.

Its projections were more pessimistic than those of the government, which foresees 0.2% this year and 1.3% next.

German Chancellor Friedrich Merz took office in May promising to revive growth in Europe’s largest economy, which has been struggling with high energy costs, weak global demand, environmental realignments, and growing competition from China.

However, the hoped-for turning point has failed to materialize and the economy continues to tread water, DIHK said.

“The situation did not improve over the summer months; on the contrary, sentiment has deteriorated slig

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