Germany’s Economic Outlook Lowers Down

(MENAFN) The German Council of Economic Experts (SVR), an advisory panel made up of academic economists, has revised its projection for Germany’s economic expansion in 2025, downgrading it from a modest 0.4 percent to a standstill at 0 percent.

This change was made public on Wednesday and reflects the Council’s reassessment of the country’s economic path for the years 2025 to 2026, a forecast that was previously issued in November of the preceding year.

Comprising five members, the panel anticipates that Germany’s gross domestic product will grow by 1 percent in 2026.

This modest improvement is expected to stem from a EURO500 billion fiscal initiative designed to stimulate activity in construction, equipment upgrades, and government expenditure.

The Council believes this substantial financial stimulus could act as a catalyst for investment and broader economic momentum.

The SVR highlighted external and internal issues impacting Germany’s economy.

Specifically, the board noted that "domestic challenges continue to slow down Germany’s economic growth," pointing to entrenched bureaucracy and prolonged regulatory approval processes that impose "unnecessarily high costs for firms."

Additionally, the panel warned that tariffs proposed by United States Leader Donald Trump could put considerable strain on Germany’s export-driven economic model.

Beyond trade tensions, the Council evaluated broader structural shifts underway.

It emphasized that disruptions in global trade policies, efforts to cut carbon emissions, an aging population, and the expanding application of artificial intelligence are all accelerating transformative change within the nation’s economy.

In its analysis, the SVR warned of a potential decline in German exports, particularly if tariffs rise sharply and unpredictably.

As for price stability, the Council projects a slight decrease in inflation, estimating it will ease from an average of 2.2 percent in 2024 to 2.1 percent in 2025, and further to 2 percent in 2026.

Summarizing the country’s uncertain economic future, the report concludes: "The outlook for the German economy in the forecast period will largely depend on the effects of US tariff policy and the fiscal package of the German government."

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