Germany Reduces 2025 GDP Outlook to Zero

(MENAFN) Germany has revised its economic outlook for 2025, dropping the projected GDP growth to zero, as reported by media sources on Tuesday.

This marks a shift from the government’s earlier estimate in January, which anticipated a modest 0.3% increase for the year.

If the economy stalls in 2025, it would represent an unprecedented three-year stretch without growth in the country’s history.

Looking ahead to 2026, the government anticipates growth "around one percent," sources revealed. This is slightly below the previous estimate from January, which had pegged the figure at 1.1%.

Sources say the outlook for Germany’s economy over the rest of the year is particularly uncertain, largely due to U.S. President Donald Trump's trade policies.

Although additional EU tariffs have been paused, the 10% general tariff on all imports and targeted duties on products like steel, aluminum, and cars remain in effect.

These trade measures, combined with weaker-than-expected business performance domestically, influenced the downgraded forecast, according to government insiders.

German firms are increasingly postponing investment decisions due to the unpredictable nature of Trump's future tariff actions.

If Trump moves forward with increasing tariffs on EU goods to 20%, as he initially proposed, the economic damage could be more severe.

Estimates from the Ifo Institute in Munich and the Kiel Institute for the World Economy indicate that full implementation of the tariffs could result in losses of roughly €13 billion (about $14.9 billion) this year, shaving 0.3 percentage points off GDP growth.

This scenario could push the German economy into contraction again in 2025, following a 0.2% GDP decline already recorded in 2024.

MENAFN22042025000045017169ID1109457959