The German government has revised its 2025 economic growth forecast from a modest 0.3% expansion to zero, citing escalating trade tensions and U.S. tariffs under President Donald Trump as primary factors. This adjustment marks the third consecutive year of stagnation for Europe’s largest economy, an unprecedented occurrence in its post-war history.
Economy Minister Robert Habeck highlighted that Germany’s export-driven economy is particularly vulnerable to external shocks, especially from its largest trading partner, the United States. The U.S. has recently imposed tariffs of up to 20% on EU goods, including German automobiles, steel, and aluminum, exacerbating the economic strain.
The prolonged economic downturn has been further compounded by political instability, with Germany lacking a governing majority since November. A new government is anticipated to form following the upcoming parliamentary vote on May 6.
Looking ahead, the government projects a modest 1% growth in 2026, contingent upon the resolution of trade disputes and the implementation of structural reforms aimed at enhancing competitiveness. Analysts caution that without significant policy changes, Germany may continue to face economic challenges in the coming years.
