Germany’s economy remains mired in stagnation as 2025 draws to a close, following two consecutive years of contraction. Early-year hopes of a modest recovery were dashed by an unexpected escalation of tariffs by the United States.
Germany’s leading economic institutes are forecasting growth of just 0.1 percent for the year, after repeatedly cutting projections that had stood at 0.8 percent last autumn. The downgrades followed Washington’s decision to raise duties earlier in 2025.
Analysts say the tariff shock has compounded the export-driven economy’s structural weaknesses, with manufacturing already under strain. The combination of weaker external demand, eroded confidence, and limited traction from domestic policy has once again pushed recovery out of reach.
