Germany's Growth Forecast HALVED

Germany’s economic outlook has deteriorated significantly, according to new assessments from economic advisers to Chancellor Friedrich Merz. The downgraded forecast is partly due to concerns about the conflict with Iran as well as ongoing pressure from U.S. tariffs.

The advisers now expect the German economy to grow by only 0.5 percent this year. In last November’s previous forecast, growth was estimated at 0.9 percent.

The long-term outlook is also considered weak. For the year 2027, GDP growth is expected to reach only 0.8 percent, according to the news agency TT.

At the same time, the advisers warn that the situation could deteriorate further. In particular, they point to the risk that the conflict with Iran could become more prolonged and have greater economic consequences than so far estimated.

According to the new forecast, inflation in Germany is expected to average 3.0 percent this year. For 2027, inflation is projected to be at 2.8 percent.

The eurozone as a whole is also expected to see weak development. The growth forecast for the currency union stands at 0.7 percent this year and 1.0 percent in 2027.