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4d ago

Germany Braces for Third Consecutive Year of Economic Stagnation

Revised forecasts predict stagnation or slight recession in 2025 as U.S. tariffs and weak global demand strain Europe’s largest economy.

Container ships are seen at the loading terminal "Altenwerder" in the port of Hamburg, Germany, February 17, 2025. Picture taken with a drone. REUTERS/Fabian Bimmer
The skyline with the banking district is seen during sunset in Frankfurt, Germany, February 27, 2024. REUTERS/Kai Pfaffenbach
Deutsche Bundesbank President Joachim Nagel speaks on measures to spur growth in the German economy at Humboldt University, Berlin, Germany, March 10, 2025. REUTERS/Liesa Johannssen/File Photo
Deputy Finance Minister Joerg Kukies arrives for questioning by a German federal parliament committee investigating the payment systems provider Wirecard scandal in Berlin, Germany, April 21, 2021. Bernd von Jutrczenka/Pool via REUTERS

Overview

  • The German government has downgraded its 2025 economic growth forecast to stagnation, abandoning earlier projections of 0.3% expansion.
  • Bundesbank President Joachim Nagel warns of a possible slight recession, marking the first three-year stretch of no growth in Germany’s postwar history.
  • U.S. trade tariffs and global economic uncertainty are cited as major factors undermining Germany’s export-driven economy and investment climate.
  • Exports are projected to decline by 2.2% in 2025, with unemployment expected to rise to 6.3% before easing slightly in 2026.
  • Economic leaders emphasize the urgent need for swift implementation of coalition-agreed measures to bolster resilience and competitiveness.