Overview

• German economic institutes have revised the 2025 GDP growth forecast down to 0.1%, citing U.S. tariffs on steel, aluminium, and cars.
• The forecast excludes the potential impact of suspended reciprocal tariffs announced by U.S. President Donald Trump, which could double economic damage if implemented.
• Germany faces the prospect of a third consecutive year of recession, a post-war first, underscoring deep structural vulnerabilities.
• A newly formed coalition between conservatives and Social Democrats has introduced a €500 billion infrastructure fund to stimulate growth and reform borrowing rules.
• Projections for 2026 suggest a modest recovery with 1.3% GDP growth, slight reductions in unemployment, and easing inflation rates.