Ifo Institute economists see potential growth of 0.8 per cent only in 2026

A meagre 0.2 per cent GDP growth for 2025: this is the forecast presented by researchers at the ifo Institute (https://ifo.de) today, Monday, who see potential growth of 0.8 per cent only in 2026. According to the report, industry in particular will suffer from weak demand and competitive pressure.

‘Economy is stuck’

‘The German economy is stuck. Despite a renewed increase in purchasing power, consumer sentiment remains subdued, and companies are also reluctant to invest,’ says Timo Wollmershäuser, Head of the ifo Economic Forecasting.

In addition to increasing international competition, political uncertainties in both Germany and the United States are creating considerable risks, they say. The new US administration has adopted an ‘erratic and protectionist economic policy’.

Tariffs and uncertainty

In particular, the tariffs on imports from Mexico, Canada and China that have been announced, along with corresponding counter-tariffs, are having an initial negative impact on the US and global economies, according to the Munich-based economists.

They warn that if tariffs on European products are also introduced, this could have a significant impact on the German export economy. There are also domestic political uncertainties. Measures to strengthen infrastructure and defence are currently on hold.

‘A reliable economic policy is essential to build trust and boost investment. Companies need planning security, especially in view of the current challenges posed by structural change in industry,’ Wollmershäuser said.