Published by Global Banking & Finance Review®
Posted on June 23, 2025
1 min readLast updated: January 23, 2026
Add as preferred source on GoogleThe BDI predicts a 0.3% contraction in Germany's 2025 economy due to US tariffs, marking a third consecutive decline. Recovery is possible with further reforms.
(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.
In January BDI had forecast a 0.1% contraction, but flagged that changes to U.S. tariff policy might impact the export-driven economy further.
A contraction in 2025 would mark Germany's third consecutive annual decline.
The U.S. was Germany's biggest trading partner in 2024 with two-way goods trade totalling 253 billion euros ($288.02 billion).
"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.
Leibinger welcomed initial steps taken by the current government, such as tax and energy price relief, but said further reforms were necessary.
BDI also offered the government support in strengthening Germany's defence capabilities, with Leibinger saying that "German industry is ready to make its contribution."
(Reporting by Christian Kraemer, Writing by Isabel Demetz, Editing by Friederike Heine)
The BDI industry association forecasts a 0.3% contraction in the German economy for 2025, which is a downgrade from their earlier prediction of a 0.1% contraction.
U.S. tariffs are weighing on German exports, contributing to the expected economic contraction in 2025, marking Germany's third consecutive annual decline.
The current government has initiated tax and energy price relief measures, but further reforms are deemed necessary according to BDI President Peter Leibinger.
The BDI has offered to support the government in strengthening Germany's defense capabilities, indicating that German industry is ready to contribute.
In 2024, the U.S. was Germany's biggest trading partner, with two-way goods trade totaling 253 billion euros, equivalent to approximately $288.02 billion.
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