According to the latest forecast of the EU, Germany is threatening stagnation this year. The Commission has significantly reduced its growth forecasts.
The EU Commission has significantly reduced the growth forecast for the economy of the State Association for the current year. In its spring forecast, the EU authority now expects growth of the entire EU of 1.1 percent. The Commission now expects an increase of 0.9 percent for the euro zone. The Commission reduced both forecasts by 0.4 percentage points compared to its November forecast.
Germany is expected to get out of the economic valley after two years of recession in 2025: The Commission predicts stagnation for the current year after it has been forecasting an increase of 0.7 percent in autumn.
“Increasing global uncertainty”
The EU Commission justified its assessment with the burden of higher tariffs and an increasing global uncertainty that will pull consumption, investments and exports down.
In contrast, increased private expenditure and the billion-dollar financial package for defense and infrastructure decided by the new federal government have had a positive impact on expectations.
With its estimate, the EU Commission comes to the same conclusion as the Federal Government, which in 2025 expects German economic output. The International Monetary Fund (IMF) also does not promote Germany in the current year.
Germany also in 2026 behind the euro zone?
It was not until 2026 that the largest economy in Europe will return to the growth zone. With 1.1 percent, the German gross domestic product should not grow as much as in the euro area, for which the EU Commission expects an increase of 1.4 percent.
“Despite high trade voltages and increasing global uncertainty, the EU economy is resistant,” said EU economic commissioner Valdis Dombrovskis and added: “Based on a robust labor market and increasing wages, growth in 2025 should continue, albeit at a moderate pace.”
Inflation under control?
The lower growth is accompanied by less inflation expectation. The inflation in the euro area could decrease faster than previously forecast and this year towards the two percent goal of the European Central Bank.
The Commission expects that the 2025 inflation rate will fall to 2.1 percent and in 2026 with 1.7 percent will even drop to the two percent mark.
Jakob Mayr, ARD Brussels, Tagesschau, May 19, 2025 3:34 p.m.
