The CDU received just 4.9% of the vote in Mecklenburg-Western Pomerania, according to the preliminary result reported by the state’s election authorities, falling below the 5% threshold for representation in the state parliament. It was the first time the CDU failed to enter a German state legislature since the Federal Republic was founded.

The Alternative for Germany, or AfD, finished first in the northeastern state with 38.2%, ahead of the Social Democrats at 35.5%. The Left Party received 6.5% and the Greens 5.7%.

Merz described the CDU’s result as a “disaster” but said the outcome would not cause him to abandon his reform agenda or leave the chancellorship.

“What needs to be done now requires backbone, steadfastness, and patience,” Merz said after the elections. He said he would demonstrate those qualities as CDU chairman and as chancellor.

CDU suffers historic setback

The result in Mecklenburg-Western Pomerania represents a major reversal for the CDU in a state where it had won 13.3% in the 2021 election.

The party’s failure to cross the 5% threshold means it will not hold seats in the new state parliament through its party-list vote. The preliminary result also left the FDP and Sahra Wagenknecht Alliance below the threshold.

The AfD’s 38.2% made it the largest party in the state, while the governing SPD received 35.5%.

The result does not automatically determine who will form the next state government. Coalition negotiations will be required, and Germany’s established parties have generally maintained a policy of not forming governing coalitions with the AfD.

The election followed an earlier AfD victory in Saxony-Anhalt on September 6, adding to pressure on Merz and the CDU.

Berlin delivers another setback

The CDU also lost ground in Berlin.

The preliminary results put the Left Party first with 25.7%, followed by the CDU at 18.8%. The AfD received 16.2%, the Greens 14.3% and the SPD 12.1%.

The result ended the CDU’s position as the leading party in Berlin’s governing coalition and leaves the formation of a new state government subject to negotiations among the parties.

The Berlin result was particularly significant because the capital had been governed by a CDU-SPD coalition.

The CDU’s national result in the two states therefore reflected two different electoral setbacks: exclusion from the Mecklenburg-Western Pomerania parliament and a sharp loss of position in Berlin.

Merz says reforms will continue

Merz argued that the election results did not change the underlying economic problems his government was trying to address.

The federal government’s reform program includes measures covering taxation, pensions and health care, economic competitiveness, labor-market policy and reducing bureaucracy.

The government says its reforms are intended to improve economic growth, safeguard jobs and strengthen Germany’s long-term competitiveness.

Some measures have already been adopted.

The government says it approved an income-tax reform in September designed to provide relief for low- and middle-income earners. It has also advanced pension measures, including the “Frühstart-Rente” initiative, while pursuing changes intended to reduce administrative burdens and accelerate government processes.

Merz has argued that Germany’s economic difficulties make structural reform more urgent rather than less necessary.

His government took office in 2025 after Germany’s federal election, with a program centered on economic renewal, investment, infrastructure and state modernization.

Election pressure grows around the government

The state-election results add another political test for Merz’s governing coalition in Berlin.

The CDU-led federal government depends on cooperation with the Social Democrats on its legislative agenda. State elections do not directly change the composition of the Bundestag, but poor results can affect the political environment in which the federal coalition operates.

The CDU’s result in Mecklenburg-Western Pomerania is particularly notable because the party did not merely lose votes; it fell below the threshold required for parliamentary representation.

The AfD’s performance also changes the political landscape in the eastern state. With 38.2%, it became the largest party but still faces the question of whether other parties will cooperate with it to form a government.

Merz has meanwhile rejected speculation that he should leave office.

His position is that the federal government should continue working on the reforms it has already begun.

Economic reform remains the government’s central argument

The federal government has presented its economic program as a response to weak growth, high structural costs and declining competitiveness.

Its reform timetable includes measures involving energy costs, infrastructure, taxation, employment, pensions and the reduction of bureaucracy.

In a September 9 address to the Bundestag, Merz said further reforms were needed to strengthen economic growth and provide greater prospects for younger Germans.

The latest state-election results have not changed that stated objective.

They have, however, increased the political pressure under which the government must pursue it.

For Merz, the immediate challenge is to demonstrate that his government can continue passing reforms while responding to declining support for the CDU in several states.

The September 20 elections do not determine the future of the federal government. But they provide a clear measure of the political environment Merz now faces: his party suffered its worst state-level result in postwar history in Mecklenburg-Western Pomerania, while the CDU also lost its leading position in Berlin.

Merz’s response has been to stay the course.

Whether that strategy can translate into stronger economic performance and political support will depend on the implementation of the reforms still ahead.

Reporting Credit:  Mecklenburg-Western Pomerania State Returning Officer — preliminary state-election results; Berlin State Election Authority — preliminary Abgeordnetenhaus election results; German Federal Government — official reform program and implementation timetable; German Chancellor Friedrich Merz/Federal Government — statements on the reform agenda and response to the election results.

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Data released Thursday by Argentina’s national statistics agency, INDEC, showed consumer prices increased 2.1% in May compared with the previous month. The figure marked the lowest monthly inflation reading since September and was welcomed by government officials as evidence that the administration’s anti-inflation strategy continues to make progress.

Economy Minister Luis Caputo highlighted the result as a significant milestone in the government’s effort to stabilize prices after years of chronic inflation that have weighed heavily on households and businesses.

Annual Inflation Remains Elevated

Despite the improvement in monthly figures, annual inflation edged higher to 33.2% in May.

The increase reflected comparison effects from a year earlier, when inflation had fallen to a seven-year low of 1.5% in May 2025. Since then, consumer prices have accelerated, placing continued pressure on household budgets and contributing to growing public dissatisfaction over living costs.

The latest data suggests inflation remains one of the central challenges facing Milei’s administration, even as the government points to progress in bringing price growth under control compared with the levels seen when he took office.

Communications and Food Costs Rise

Among the categories tracked by INDEC, communications recorded the largest monthly increase, rising 3.4% as phone and internet service costs moved higher.

Education expenses also posted notable gains, while food prices increased 2.5%, adding pressure to household spending in a country where many consumers continue to struggle with the rising cost of living.

Food inflation remains particularly sensitive politically because it directly affects lower- and middle-income families that have experienced declining purchasing power during the country’s prolonged economic instability.

Government Celebrates Economic Progress

President Milei publicly praised Caputo following the release of the inflation figures, sharing the report on social media and congratulating his economy minister.

The administration also welcomed another development viewed as positive for investor confidence. Late Wednesday, credit ratings agency S&P Global upgraded Argentina’s sovereign credit rating to stable B- from the CCC category, citing the government’s record of meeting debt obligations.

While Argentina remains below investment-grade status, the upgrade is seen as a step toward restoring confidence among international investors and improving access to global capital markets.

The government has made financial credibility a priority as it seeks to move beyond the recurring debt crises that have defined much of Argentina’s recent economic history.

Milei’s Economic Program Shows Mixed Results

Since taking office in late 2023, Milei has pursued a sweeping agenda centered on fiscal discipline, deregulation and reductions in public spending.

The policies have produced a rare budget surplus and helped reduce inflation from the triple-digit levels that exceeded 200% annually when he assumed power.

At the same time, economic adjustments have come with significant costs. Real wages have struggled to keep pace with inflation, while unemployment has increased as domestic industries face greater competition from imported goods.

Retail businesses and manufacturing companies have reported weaker activity, contributing to concerns about slowing economic growth in labor-intensive sectors.

Political Challenges Intensify

The administration’s economic achievements are also being tested by a series of political controversies.

Milei campaigned on promises to improve transparency and eliminate corruption, but recent investigations involving senior officials have generated fresh scrutiny.

Most recently, cabinet chief Manuel Adorni became the focus of an investigation related to allegations of illicit enrichment and questions surrounding travel expenses and property acquisitions. The controversy gained additional attention after disclosures involving undeclared savings and cryptocurrency holdings.

The developments have complicated the government’s efforts to maintain public support while implementing austerity measures that include reductions in spending on education, health care and social programs.

Outlook

The latest inflation report offers a positive signal for Milei’s administration and supports its argument that economic stabilization efforts are producing results.

However, persistent price pressures, weaker labor market conditions and growing political challenges suggest that maintaining public confidence may prove just as difficult as reducing inflation itself.

Whether the recent slowdown in monthly inflation can be sustained will likely remain a key measure of the government’s success as Argentina continues its attempt to rebuild economic stability and investor confidence.

Tags: Argentina, Javier Milei, Inflation, Economy, Luis Caputo, INDEC, S&P Global, Economic Reform, South America, Cost of Living

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As first reported by The Associated Press, the strike was organized by Bolivia’s Central Union of Workers, though participation has been uneven, with transport unions and some trade blocs holding back after separate negotiations. That split matters strategically: the protests are less about immediate paralysis and more about whether organized labor can still convert economic anger into sustained national leverage.

Price Shock Pushes Economic Pain Into the Streets

The government’s decree effectively doubled gasoline prices from roughly $0.53 to $1 per liter, ending a subsidy regime that had been politically untouchable for two decades. Paz argues the state had been spending about $10 million a day to support an increasingly unsustainable system that also encouraged smuggling across borders.

That fiscal logic may be economically defensible, but the social transmission mechanism is immediate: higher transport fares, rising food costs, and mounting pressure on wage negotiations. For miners, factory workers, and public-sector unions, the subsidy cut is being felt less as macroeconomic stabilization and more as a direct compression of household purchasing power.

Union Fragmentation Limits but Does Not Remove the Risk

A notable feature of the unrest is that Bolivia’s labor response is not fully unified.

While the Central Union of Workers called the strike, major transport groups did not join after securing side concessions, including duty-free imports for spare parts and tariff adjustments. This weakens the immediate disruptive capacity of the protests, but it also introduces a more volatile political variable: fragmented labor fronts can quickly recombine if inflation accelerates.

The risk for Paz is that partial protests today can become a wider anti-austerity coalition if food prices continue to rise faster than wages.

Dollar Relief Strategy Now Depends on Political Endurance

The administration’s economic rationale is rooted in foreign currency scarcity.

Business groups have largely backed the reform, arguing that ending subsidies could free dollars for imports and capital inflows while reducing distortions that have weakened reserves. That support gives Paz short-term elite backing, but it does little to cushion the political cost among workers facing real-time price increases.

This makes the subsidy battle a test of endurance rather than a single protest cycle. If the government can stabilize dollar access quickly, public resistance may soften. If shortages persist despite the sacrifice, the legitimacy of the reform could erode rapidly.

The Real Threat Is Whether Economic Reform Outruns Social Patience

The forward-looking pressure point is now timing.

Bolivia’s leadership is effectively asking the public to accept immediate hardship in exchange for delayed macroeconomic gains. The protests suggest that many unions are not yet convinced the trade-off is credible.

That leaves the government facing a narrow political corridor: deliver visible currency stabilization and supply relief before inflationary spillovers deepen, or risk transforming a fiscal correction into a broader legitimacy crisis for its economic program.

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The deal marks a significant moment for Germany, Europe’s largest economy, which is teetering on the brink of recession. The ripple effects of sweeping tariffs imposed by the Trump administration have triggered global economic instability, pushing Germany into a state of heightened concern. As fears of a downturn loom, the newly formed coalition aims to tackle these challenges head-on.

Speaking at a news conference in Berlin, Merz, the CDU leader who emerged victorious in February’s federal elections, laid out an ambitious agenda for Germany’s future. “The future government will reform and invest to keep Germany stable, secure, and economically stronger,” Merz asserted, reflecting an optimistic tone amid the growing uncertainties.

He emphasized that Europe could once again “rely” on Germany, pointing to the coalition’s commitment to restoring the country’s position as a beacon of economic stability in a turbulent world. Merz acknowledged the increasing political tensions globally and the strains these external pressures have placed on Germany, citing the ongoing war in Ukraine and the unpredictable economic consequences of the Trump administration’s trade decisions.

“The war in Ukraine continues, with no end in sight,” Merz said. “At the same time, economic uncertainties are mounting—decisions by the American government this week have already triggered turbulence. We are witnessing these developments in real time.”

This reference to Trump’s tariffs highlights the precarious global economic situation. The tariffs, which have altered the global trade landscape, have created ripples in Germany’s economy, adding pressure to the negotiations for a new coalition government.

Unveiling the details of the coalition agreement, Merz outlined several significant policy shifts, including a proposal to extend the minimum period for obtaining German citizenship to five years, up from three. The new government also plans to overhaul Germany’s security policies, with a substantial increase in defense spending and the introduction of a Swedish-style voluntary military service.

Despite the CDU’s victory in the February elections, Merz faces mounting pressure. The far-right Alternative for Germany (AfD) has gained considerable traction, securing second place in the election and nearly doubling its supporter base. A recent Ipsos poll released Wednesday showed the AfD leading with 25%, just ahead of the CDU at 24%.

“For the first time, we are the strongest force in Germany,” AfD co-leader Alice Weidel declared, marking a pivotal moment for the party. This shift has added a sense of urgency to the coalition talks, with Merz and his allies in the CDU/CSU keen to forge a government that can address both economic instability and rising far-right influence.

Merz has promised to revive Germany’s economy, which has suffered from stagnation in recent years. One of the key areas of focus for the incoming Chancellor is defense. With growing concerns over Russia’s aggression and a more hostile stance from the US on European security, Merz has pledged to increase defense spending and allow for greater investments in defense infrastructure.

Additionally, Merz has signaled his intention to tighten Germany’s immigration policies, following a series of high-profile attacks attributed to migrants. This issue has become a focal point in the 2025 election campaign, and Merz has vowed to make it a priority.

As Merz prepares to take office, the coalition’s path forward will require navigating both internal and external challenges. The global economic climate, shaped by the US tariffs, and the rise of the AfD, will test his leadership. However, Merz’s vision for a more secure, economically resilient Germany offers a glimpse of hope in an otherwise uncertain landscape.

With the new coalition set to take shape, the coming months will be crucial for Germany as it seeks to redefine its role in Europe and the world. Will Merz’s leadership steer Germany through turbulent waters? Time will tell.

Source: CNN – Germany’s incoming Chancellor Merz unveils coalition as Trump tariffs spark recession fears

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Thousands of delegates at the National People’s Congress (NPC) and the Chinese People’s Political Consultative Conference (CPPCC) are expected to approve the plan in a near-unanimous vote.

Key Takeaways from China’s Economic Plan

1. Focus on AI and High-Tech Innovation

Artificial intelligence (AI) took center stage at this year’s gathering, fueled by the recent success of China’s DeepSeek, a tech firm whose AI model rivals U.S. counterparts despite strict American restrictions on AI chip exports.

To support AI and other future technologies, China announced a state-backed fund expected to raise nearly 1 trillion yuan ($138 billion) over the next two decades from both local governments and the private sector. The government’s work report emphasized fostering industries of the future, including:

• Biomanufacturing
• Quantum technology
• Embodied AI
• 6G technology

Xi Jinping is pushing for greater technological self-sufficiency, signaling that China will innovate independently in response to U.S. trade restrictions. In a major shift, Xi also extended an olive branch to private tech firms, urging them to take a leading role in China’s innovation drive.

2. Economic Growth and Consumer Demand Boost

China set an ambitious 5% growth target for 2024 and plans to achieve it through increased government spending. Officials raised the budget deficit to 4% of GDP, the highest level in decades, to stimulate economic activity.

Premier Li Qiang emphasized the urgency of boosting domestic demand, recognizing it as the “main engine” of China’s economic growth. The government announced measures to:

• Expand welfare programs such as free preschool education and elderly care.
• Create more jobs and raise wages to improve consumer confidence.
• Extend trade-in programs for old appliances to encourage spending.

However, experts warn that relying on local governments to fund these programs could be problematic, as many provinces lack the financial resources to sustain them without raising taxes, which could further dampen consumption.

3. Trade War Tensions and China’s Defiant Stance

Amid escalating trade tensions, China reaffirmed its commitment to economic self-sufficiency and resilience against U.S. restrictions. President Donald Trump recently doubled tariffs on all Chinese imports to 20%, prompting China to retaliate with 10%-15% tariffs on U.S. agricultural goods.

At an annual press conference, Foreign Minister Wang Yi criticized U.S. trade policies, stating:

“Where there is blockade, there is breakthrough; where there is suppression, there is innovation.”

Meanwhile, a foreign ministry spokesperson issued a blunt warning:

“If the U.S. insists on waging a tariff war, trade war, or any other kind of war, China will fight till the end.”

Looking Ahead: Will China’s Plan Succeed?

China’s leadership is projecting confidence, but the success of their strategy depends on effective implementation. Economic analysts stress that while homegrown tech breakthroughs like DeepSeek have fueled optimism, long-term growth will hinge on decisive government policies that effectively stimulate the economy and support private enterprise.

As China moves forward, its ability to balance economic reform, technological innovation, and geopolitical tensions will define its trajectory in the years ahead.

Source

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