Ifo Lowers Germany's 2025 Growth Forecast to 0.2%

Economic challenges tied to weak demand, global competition, and U.S. trade policies are driving the downgrade, with potential for improvement if domestic reforms succeed.

The Ifo Institute revised its 2025 German GDP growth projection from 0.4% to 0.2%, citing weak industrial demand and cautious business investment.
Political uncertainty in Germany and the U.S., including protectionist U.S. trade policies, adds significant economic risks.
Proposed German government reforms, such as loosening debt restrictions and a €500 billion investment plan, could improve growth if implemented effectively.
Alternative scenarios from Ifo suggest growth could reach 1.1% in 2025 with the right policy measures, but risks of further decline remain.
Inflation is expected to hold steady at 2.3% in 2025, while unemployment is projected to rise slightly to 6.2%.