The German economy is expected to contract by 0.3% in 2025, worse than the previously forecast 0.1% decline, due to the impact of U.S. tariffs on exports, according to the BDI industry association. This contraction marks Germany’s third consecutive annual decline. The U.S. was Germany’s largest trading partner in 2024, with trade totaling 253 billion euros. BDI President Peter Leibinger noted the potential for an upturn if the government continues its current reforms, including tax and energy price relief. The BDI also expressed readiness to support strengthening Germany’s defense capabilities.
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German industrial lobby group cuts 2025 economic forecast as US tariffs weigh
June 23 (Reuters) – The German economy is set to contract more than previously expected in 2025 as U.S. tariffs weigh on exports, the BDI industry association said on Monday, forecasting a 0.3% contraction in 2025. n nIn January BDI had forecast a 0.1% contraction, but flagged that changes to U.S. tariff policy might impact the export-driven economy further. n nSign up here. n nA contraction in 2025 would mark Germany ‘s third consecutive annual decline. n nThe U.S. was Germany ‘s biggest trading partner in 2024 with two-way goods trade totalling 253 billion euros ($288.02 billion). n n”Nevertheless, there is a real chance of an upturn next year if the German government resolutely pursues the path it has taken,” BDI President Peter Leibinger said in a statement. n nLeibinger welcomed initial steps taken by the current government, such as tax and energy price relief, but said further reforms were necessary. n nBDI also offered the government support in strengthening Germany ‘s defence capabilities, with Leibinger saying that “German industry is ready to make its contribution.” n nReporting by Christian Kraemer, Writing by Isabel Demetz, Editing by Friederike Heine