Germany’s economy will continue its flat development this year before possibly seeing growth of 1% in 2026, the German economy ministry says.
This means a downward correction from the modest 0.3% growth previously forecasted for 2025 and will make this year the third in a row without any growth, Kallanish notes. Export-driven German industries are suffering most from erratic US customs duties announcements and their global repercussions. The insecurity over international business relations comes on top of a lull in demand and lack of competitiveness due to high domestic production costs.
“The German economy faces great challenges, but it has stood that test before,” says outgoing economy minister Robert Habeck. “We have been in a crisis mode since 2020 – through Covid, the Russian aggression on Ukraine, energy prices and inflation. Now our next challenge is the unpredictable trade policy of the United States.”
The big task of the moment is finding a solution between the EU and US to settle the trade conflict. The EU must take a clear stance and not give in easily, and be prepared to impose effective counter measures, Habeck adds.
Private investment in Germany will remain subdued for now, but start recovering over the course of the year, possibly encouraged by the framework of the new government, the ministry says.
Christian Koehl Germany
