Published by Global Banking & Finance Review®
Posted on September 4, 2025
1 min readLast updated: January 22, 2026
Add as preferred source on GoogleGermany's GDP is expected to grow by 0.1% in 2023, with improved business expectations but challenges from U.S. tariffs.
By Maria Martinez
BERLIN (Reuters) -Germany's economy is set to tread water this year despite firmer sentiment, with gross domestic product expected to edge up by 0.1% after two years of contraction, according to forecasts published by the Kiel Institute for the World Economy (IfW).
Business expectations have improved on prospects of higher government spending, but U.S. tariff policy remains a headwind, the IfW said on Thursday.
Berlin is poised to deploy newly available public funds from 2025, which could lift next year's growth by about 0.6 percentage points and add a roughly half-sized boost in 2027.
GDP is seen growing by 1.3% in 2026 and 1.2% in 2027, according to the IfW.
As activity improves, the unemployment rate is projected to fall to 5.8% by 2027 from 6.3% this year, while the budget deficit widens from 2% of GDP in 2024 to 3.5% in 2027.
(Reporting by Maria Martinez, Editing by Rachel More)
Germany's economy is expected to grow by only 0.1% this year after two years of contraction.
Business expectations have improved due to prospects of higher government spending, although U.S. tariff policy remains a headwind.
Berlin is set to deploy public funds from 2025, which could boost growth by about 0.6 percentage points next year and provide additional support in 2027.
The unemployment rate in Germany is projected to fall to 5.8% by 2027, down from 6.3% this year.
The IfW forecasts GDP growth of 1.3% in 2026 and 1.2% in 2027.
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