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Outgoing Economy Minister Robert Habeck said the government cut
its 2025 outlook to zero from the modest growth of 0.3% it
predicted at the end of January. For next year, it is
forecasting growth of 1%, slightly lower than the 1.1% it
predicted three months ago.
“There is above all one reason for this, namely Donald Trump's
trade policy and the effects of the trade policy on Germany,”
Habeck told reporters in Berlin. He noted that Germany also
hasn't had a government with a parliamentary majority to set
policy since early November, and the new government isn't yet in
place after an election in February.
Germany hasn’t seen significant economic growth in five years.
The country for years expanded exports and dominated world trade
in engineered products like industrial machinery and luxury
cars.
But it’s suffered from increasing competition from Chinese
companies, along with many other factors, and the economy
contracted in each of the last two years.
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.
The German parliament plans to meet on May 6 to elect Friedrich
Merz as the country’s next leader, if all the parties in his
proposed government approve a coalition agreement reached
earlier this month.
Last month already, the prospective partners pushed plans
through parliament to enable higher defense spending by
loosening strict rules on incurring debt and to set up a huge
infrastructure fund that’s aimed at boosting the economy.
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