Bundesbank forecast
US tariffs brake recovery of the German economy
After a long doldrum it seemed to finally go up with the domestic economy. But burden trade barriers and growing uncertainty. There is only a better view for 2026.
According to the Bundesbank, Germany is heading for the third year in a row without economic growth. After two years of recession, the Bundesbank expects 2025 stagnation. With its downstream forecast, the central bank is lined up in the growing number of pessimistic views for the current year.
“The new US tariffs and uncertainty about future US politics initially dampen economic growth,” said Federal Bank President Joachim Nagel. “This affects German industry at a time when it began to stabilize after a long phase of weakness.”
Difficult times for “made in Germany”
Germany’s exporters in particular have to prepare for difficult times: the Bundesbank expects the US trade policy with a significant decline in exports in the current year and hardly any improvement in 2026.
The competitiveness of the German export economy also deteriorates that the euro was significantly upgraded due to the leaked US policy compared to the dollar: the strengthening of the community currency tends to increase products from the euro area on the world markets – and that in times of growing competition from China.
Billion -dollar packages as a economic driver
The recovery of the German economy is therefore delayed – until the planned state billion dollar investments in defense and infrastructure are likely to provide a boost.
For 2026, the Bundesbank expects an increase of 0.7 percent in the real gross domestic product (GDP). In December, however, the forecast for 2026 was a little more optimistic with 0.8 percent. The expectations for 2027 were meanwhile screwed up from 0.9 percent to 1.2 percent.
The biggest uncertainty factor remains the zigzag course of US President Donald Trump: a tightening of US trade policy and a new shock of trust in the US economy and the Dollar would be a significant risk of the expected recovery in Germany.
Towing goes back faster
After all, there is good news for Germany’s consumers: the inflation loses speed faster. The Bundesbank expects an inflation rate of 2.2 percent according to the European method (HVPI) to be calculated using a European method (HVPI), and in 2026 it is said to be 1.5 percent. From 2026, the core rate should also level off in about 2 percent without the prices for energy and food that is prone to fluctuation.
dpa
Source: Stern
