Economic Projections Show Stagnation

The German government has revised its economic growth forecast for 2025, now expecting stagnation instead of the previously projected 0.3% growth. This adjustment was confirmed in the spring economic projections, aligning with earlier media reports. By 2026, a modest recovery is anticipated, with GDP growth around 1%, as stated by Economy Minister Robert Habeck.

Inflation Trends Downward

Inflation is expected to ease significantly, with headline inflation projected to drop to 2% in 2025 and further to 1.9% in 2026. The government attributes this trend to prevailing inflation-dampening factors over the coming year.

Global Trade Policies Pose Risks

Habeck highlighted potential challenges from US trade policies, warning of their impact on Germany's economy. Given Germany's integration into global supply chains and its openness to foreign trade, new US protectionism could significantly affect economic growth. Habeck called for a resolution to the tariff conflict between the European Union and the US.