The Ifo institute now expects the German economy to only expand marginally by 0.2% this year, revised lower from their previous projection of 0.3%. Meanwhile, they see the economy expanding by 1.3% in 2026 but that is also lower than their previous estimate from the summer of 1.5%. For 2027, Ifo forecasts the German economy to grow by 1.6%.

Of note, the institute says that US tariffs are continuing to pose significant headwinds for Germany and that “if economic policy remains at a standstill, there will be further years of economic paralysis and erosion of German business prospects”.