Germany Revises Economic Forecast to Zero Growth for 2025

(MENAFN) Key economic advisors in Germany have revised their 2025 growth forecast down to zero from an earlier projection of 0.4 percent, according to a report released Wednesday.

The report from the German Council of Economic Experts sheds light on the country's ongoing economic struggles, marked by two consecutive years of recession. The German economy is currently trapped in a prolonged period of weakness, with bureaucratic delays and complex approval processes impeding growth. Meanwhile, structural changes are rapidly reshaping sectors and regions that had previously been economically stable.

The report also identifies U.S. President Donald Trump's trade policies as a threat to global economic stability. However, the Council points out that the financial package unveiled by the new German government could offer a chance for infrastructure modernization and the potential for a return to stronger growth rates.

"In the near future, the German economy will be significantly influenced by two factors: U.S. trade policy and the financial package," stated Monika Schnitzer, chairwoman of the Council of Economic Experts.

Schnitzer further explained that U.S. tariffs are adding additional pressure on Germany's already fragile export sector, which is expected to see further declines due to the unpredictable nature of tariff increases.

Looking ahead to 2026, the report forecasts that the German government's financial package will foster investment in construction, equipment, and government consumption. Private consumption is expected to grow modestly, buoyed by improved disposable incomes, adjusted for inflation.

The Council's downgrade mirrors the German government's earlier revision of its 2025 growth forecast to zero in April. Both the government and the Council anticipate a 1 percent growth rate for 2026.

Once the economic leadGermany Revise Economic Forecast to Zero Growth for 2025 er of Europe, Germany is now grappling with two years of recession, impacted by inflation, high energy costs, and shrinking exports, which are weighing heavily on businesses.

Founded in 1963, the five-member German Council of Economic Experts, often referred to as the "Five Sages," provides economic policy advice to the German government.

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