Overview

• The ifo business‑climate index unexpectedly fell to 87.7 in September after six monthly gains, with services—especially transport and logistics—turning down as construction showed a small bright spot.
• Preliminary first‑half figures show seven states contracting year on year, including heavyweight economies North Rhine‑Westphalia, Bavaria and Baden‑Württemberg, leaving national real output roughly flat.
• The OECD now projects just 0.3% growth for Germany in 2025 and 1.1% in 2026, notes signs of slowing industrial production, and says the full impact of higher US tariffs has yet to materialize.
• Global prospects look firmer by comparison, with the OECD lifting its 2025 growth forecast to 3.2%, underscoring Germany’s underperformance relative to peers.
• Economists cite US trade measures, high energy and production costs, and bureaucracy as headwinds, with labor‑market research pointing to weak job gains in 2025 and a slight drop in employment in 2026 alongside sectoral shifts.