Germany’s economy is expected to stagnate in 2025 after two consecutive years of contraction, with the ongoing effects of US tariffs, particularly on metals like steel and aluminium, potentially exacerbating the country’s already slow economic recovery, think tanks warned on Thursday.
Five major economic institutes released a report predicting minimal growth of just 0.1% for Europe’s largest economy this year, down from their previous forecast of 0.8% in September. They forecast a slightly better growth rate of 1.3% for 2026.
The report highlighted the uncertainty surrounding US trade policies under the Trump administration, noting that US tariffs on aluminium, steel, and vehicle imports could reduce Germany’s growth by 0.1 percentage points in both 2025 and 2026. The economists also cautioned that the full impact of President Trump’s recent tariff announcements, which were largely put on hold, could potentially double the negative effect on Germany’s GDP. However, they noted the challenge in quantifying these effects, as the sharp increase in tariff rates is unprecedented in today’s globalized economy.
Germany’s incoming government, expected to take office next month after prolonged political delays, aims to boost the country’s economic outlook. Friedrich Merz, the likely next chancellor, and his coalition partners revealed their plan for economic revitalization on Wednesday.
