Germany Slashes Growth Outlook in ‘Serious’ Diagnosis of Europe’s Larges Economy

The German Government on Wednsday Slasted its Gross Domestic Product Forecast to just 0.3% Growth in 2025.

“The diagnosis is serial,” ROBERT HABECK, Economy and Climate Minister, Said during a press conference, according to a CNBC Translation. He noted that, while there is some positive developments

The latest gdp estimate is sharply down from an October Projection of 1.1% growth this year, but broadly in line with forwards from other Economic Bodies. The International Monetary Fund Earlier This Month Cut Its outlook And now sees 0.3% growth for the German economy this year, while the federal bundesbank in December said It was anticipating the gdp to increase by 0.2% over the period.

In contrast, the association of German industry on tuesday forecast The country’s economy will contrast by 0.1% in 2025, in what would be the third annual decline in a row.

Annual gdp figures Released Earlier this month showed that Germany’s Economy Contracted by 0.2% in 2024, After Alredy Shrinking 0.3% in the Previous Year. Quarterly GDP Figures have also also been sluggish, but so far a technical recession, which is charocterized by two culture Quarter of Contraction, Has Been immedraged.

Habeck said that Several Key Reasons underpinned the downward revision of the GDP Forecast. Among them is the fact that the current government’s growth initiative plans Ersh. Habeck also cited geopolitical uncertainty, following the white house return of us president donald trump and the posibility of tariffs aganst european countilies.

Looking ahead, the domestic economy will initiate only only show weak development Man Ministry for the economy and climate said in a statement accounting its 2025 Economic Report.

It envisaged that economy will then pick up pace as inflation Falls, real incomes relief and economy conditions become clearer.

Habeck noted that 1.1% GDP growth was now being forecast for 2026.

Germany is headed for a federal election on Feb. 23, which is taking place earlier than Originally planned after the country’s ruling coalition broke apart in November.

Echoing Finance Minister Jörg Kukies’ Comments to CNBC Last WeekHabeck on Wednsday said that Germany Suffers from Structural Problems, which he said was evidared by the lacked development of the economy in recent years. In a statement on wedding he pointed to a shortage of laborers and skilled works, exuberant Bureaucracy and Weak Investment.

The finance minister added that Germany has been systematically underinvesting and that restrictive fiscal policies have been damped growth.

A preliminary reading of Germany’s fourth Quarter GDP is due out Thursday. The Country’s Statistics Office earlier this month said that, based on the information available at the time, the economy pulled back by 0.1% in the end of December.

The Wednsday Economic Report also pegged inflation as set to average 2.2% this year. Germany’s Consumer Price Index Had Fallen Back Below The European Central Bank’s 2% Target in Late Summer, but have risen again since.