Latest news with #stagnation
Washington Post
21-05-2025
- Business
- Washington Post
Germany's economy will stagnate this year as tariffs cast a shadow, advisers say
BERLIN — Germany's economy will stagnate this year as the country faces headwinds from U.S. President Donald Trump's tariffs and trade threats, the government's panel of independent economic advisers said Wednesday. Germany has Europe's biggest economy, but hasn't seen significant economic growth in five years and the gross domestic product shrank in each of the last two years .
Associated Press
21-05-2025
- Business
- Associated Press
Germany's economy will stagnate this year as tariffs cast a shadow, advisers say
BERLIN (AP) — Germany's economy will stagnate this year as the country faces headwinds from U.S. President Donald Trump's tariffs and trade threats, the government's panel of independent economic advisers said Wednesday. Germany has Europe's biggest economy, but hasn't seen significant economic growth in five years and the gross domestic product shrank in each of the last two years. The advisory panel, in its first forecast since new Chancellor Friedrich Merz's government took office earlier this month, predicted the economy will stagnate this year and grow by 1% in 2026. Its previous forecast, in November, was for 0.4% growth this year. The new outlook is in line with the forecast made a month ago by Germany's last government. Merz, who took office on May 6, has pledged to roll back bureaucracy, advance digitization, provide tax breaks for companies and promote more European trade agreements. 'Trump's tariff policy is increasing uncertainty and endangering economic growth worldwide,' said Monika Schnitzer, the head of the panel. But she said that a huge investment package put together by Merz's coalition 'offers opportunities for a modernization of infrastructure in Germany and a return to a higher path of growth,' meaning a better outlook for next year. Germany for years expanded exports and dominated world trade in engineered products such as industrial machinery and luxury cars. But it has suffered from increasing competition from Chinese companies, along with many other factors, and Trump's tariffs have added a further risk to German exports. Last year, the United States was Germany's biggest single trading partner for the first time since 2015, displacing China from the top spot as exports to the Asian power declined.
Reuters
21-05-2025
- Business
- Reuters
German economic advisory panel forecasts stagnation this year
BERLIN, May 21 (Reuters) - The German Council of Economic Experts cut its economic forecast for the German economy on Wednesday, now expecting Europe's biggest economy to stagnate this year as it sees a "pronounced phase of weakness". The academic body that advises the German government on economic policy had predicted the economy to grow 0.4% this year in its previous forecasts published in November. Germany was the only member of the G7 advanced economies that failed to grow for the last two years, burdened by fiscal restraints and an industrial downturn. The tariffs announced by U.S. President Donald Trump are expected to deal a major blow to its export-oriented economy. "The German economy will be significantly influenced by two factors in the near future: U.S. tariff policy and the fiscal package," said Monika Schnitzer, chairwoman of the Council of Economic Experts. The U.S. was Germany's biggest trading partner in 2024 with two-way goods trade totalling 253 billion euros ($284 billion). On the bright side, Germany approved in March a fiscal plan which includes a 500-billion euro special fund for infrastructure investments, and largely removes defence investment from rules that cap borrowing. The fiscal package offers opportunities to return to a growth path, economists say. Starting in 2026, the funds provided by the fiscal package will set positive impulses for investment in construction and equipment as well as government spending, the council said, forecasting 1.0% growth next year. Private consumption is also expected to grow somewhat stronger in 2026 compared to 2025, as disposable incomes will increase more significantly in real terms, the council added. ($1 = 0.8898 euros)
