Revised Growth Projections

The Institute for Economic Research (Ifo) released a report on Thursday revising its 2026 German GDP growth forecast downward to 1.3%, from the previous estimate of 1.5%.

Short-Term Economic Performance

For the third quarter of 2025, Germany's economic output is projected to increase by 0.1% compared to the previous quarter, indicating sluggish near-term growth.

Impact of US Tariffs

"The US tariffs continue to exert a significant negative effect on the German economy," stated Timo Wollmershauser, Deputy Director of the ifo Center for Macroeconomics and Surveys. "While the recent US-EU tariff agreement is not expected to alter the forecast substantially—as effective tariffs remain largely unchanged from summer levels—the reduction in uncertainty from the resolved dispute should gradually provide economic support."

Long-Term Outlook

Looking ahead to 2027, GDP growth is anticipated to rebound to 1.6%, suggesting a gradual recovery from current challenges.