The German economy will shrink despite the postponement of the « reciprocal » duties
| Germany is being able to enter the third consecutive year of a recession, which has not happened in its post -war history. |
Trump’s aggressive trade policy holds the world economy in tension.
Klaus Weerstras. IHS Research Institute in Vienna
He participated in the work on the forecast.
« Additional trade barriers are a serious burden for the global economy … especially because of their unpredictability, » he added. « CHANGES in duties can happen literally daily, which increases the uncertainty in economic policy to an unprecedented level. »
« Germany returned » with a new coalition, tightening of migration and message to Trump
| Institutes’ new forecasts include 25% of the United States on aluminum, EU steel and cars that are in force but do not take into account the increase in duties by 20% on other goods announced last week and frozen for a 90-day Wednesday period. |
In 2026, institutes forecast economic growth by 1.3%, unchanged over the previous forecast.
Following the February elections, the Conservatives of Mertz and the Social Democrats announced the creation of a fund of EUR 500 billion for infrastructure and large -scale changes for loans to strengthen defense and revive growth.
The German Parliament approved Mertz’s ambitious plan for defense costs
- The fiscal package will probably lead to additional government spending for EUR 24 billion in 2026, which will add half a percentage point to economic growth according to institutes.
Torsten Schmidt of the RWI Institute, also a participant in the production of the forecast, has warned that additional costs in the construction and defense sectors should be gradual.
« The new government must be intelligent to direct the means to stimulate the growth of the real economy, not just evaporate in the form of price effects, » he said.
However, economic weakness will adversely affect the German labor market. Unemployment is expected to rise to 6.3% this year compared to 6.0% in 2024. Up to 6.2%is scheduled for next year.
Inflation in Germany will be within 2.2% this yearbefore decreasing to 2.1% in 2026
