German government expects economic stagnation in 2025

The German government has lowered its economic growth forecast, expecting stagnation in 2025. It is reported by Reuters.

Announcing the relevant data, outgoing Economy Minister Robert Habeck called Donald Trump’s trade policy the main reason for the zero growth forecast.

“Given the close integration of the German economy into global supply chains and our high level of foreign trade openness, new US protectionism could have a significant direct and indirect impact on our economic growth,” he said.

Habeck called on the EU and the US to find appropriate trade solutions. In addition, the EU, in his opinion, should prepare countermeasures, if necessary.

In October 2024, the German government expected the country’s GDP to grow by 1.1% in 2025, but in January it downgraded the forecast to 0.3%.

Currently, Germany’s GDP is forecast to grow by 1% in 2026 (the January forecast was 1.1%). Exports are expected to fall by 2.2% y/y this year after a 1.1% decline in 2024, and to grow by 1.3% y/y in 2026.

Earlier, German economic institutes lowered their GDP growth forecast for 2025 to 0.1% from 0.8% expected in September, taking into account the initial US tariffs on steel, aluminum and cars. Germany was the only G7 economy that did not grow over the past two years. The tariffs announced by Donald Trump will deal a serious blow to the country.

For 2026, the institutes forecast economic growth of just above 1% – the previous forecast was 1.3%.