Ifo Institute forecasts 0.2 percent minimal growth for Germany in 2025

Brussels – “The German economy is treading water.” Timo Wollmershäuser, head of economic forecasting at Ifo, the Munich-based Economic Research Institute, gives no reassurances about the difficulties of the eurozone’s leading economy. The numbers indicate “minimal growth” in the gross domestic product (GDP) of 0.2 percent for the current year, which is 0.2 percentage points less than in the winter forecasts. After zero growth in 2024, 2025 will see ‘zero and something’ growth.

The Ifo head of forecasts explains that “despite a recovery in purchasing power, consumer sentiment remains subdued, and companies are also reluctant to invest.” In particular, the Munich-based institute notes that industry is suffering from weak demand and increasing international competitive pressure. At the same time, political uncertainties in both Germany and the United States are creating considerable risks.

So the policies of Donald Trump’s new administration, which the Munich-based institute sees as “erratic and protectionist,” are problematic for the EU. “Reliable economic policy is vital to creating confidence and stimulating investment,” Wollmershäuser continued. “Companies need planning certainty,” he emphasizes about tariff risks. 

The already announced import tariffs on goods from Mexico, Canada, and China and retaliatory tariffs are initially negatively impacting the US and global economies. “If tariffs on European products are additionally increased, this could hit German export business hard,” Ifo warns, concerned about domestic politics. Although there are talks on measures to strengthen infrastructure and defense, “it remains to be seen if and when they will be implemented.”