Germany's economic outlook remains challenging as second-quarter GDP figures reveal a continued slump, prompting calls from Economy Minister Jutta Reiche for urgent and courageous reforms to restore competitiveness. Chancellor Friedrich Merz has acknowledged that addressing the country's economic difficulties is proving more complex than initially expected, describing the situation as a structural crisis rather than a mere slowdown. Merz emphasized that the current welfare state is unsustainable given economic output and called for reforms in social welfare spending while ruling out tax increases on medium-sized companies. The German economy shows no signs of emerging from recession, with concerns that 2025 could mark the third consecutive year of contraction, a scenario unprecedented in the country's postwar history. Merz's administration faces political challenges, including resistance from coalition partners favoring increased debt and wealth taxes. The chancellor has framed his tenure as a critical opportunity to prevent a government led by the far-right AfD, though progress has been limited so far.