The forecast for 2024 is also being lowered. As it looks now, the German economy will shrink by 0.2 percent this year. Previously, the Bundesbank's forecast for this year was a weak annual growth of 0.3 percent.
If the incoming US President Donald Trump's plans for tariffs on all imports, including from Germany, were to materialize, it would get even worse, Bundesbank fears – part of the European Central Bank (ECB). Then, the German economy is expected to continue to shrink by 0.1-0.5 percent.
The German economy is not only struggling with a persistent economic headwind but also has structural problems, says Bundesbank chief Joachim Nagel.
This particularly applies to the German industrial sector, according to Nagel.
The labor market is now also noticeably feeling the effects of the prolonged weak economic activity, he says.
For 2026 and 2027, Bundesbank economists expect the German economy to grow by 0.8 and 0.9 percent, respectively.
