Europa Posted on 2025-03-18 15:55:00

Ifo lowers forecast for German economy - Weak industrial demand and tariff risk among main factors

From Kristi Ceta

Ifo lowers forecast for German economy - Weak industrial demand and tariff risk

The Munich-based Ifo Institute for Economic Research has lowered its economic growth forecast for Germany in its latest published report.

The institute now expects Germany's Gross Domestic Product to grow by just 0.2 percent this year, a drop of 0.2 percentage points from its previous forecast.

The report highlights weak industrial demand and increasing global competition as the main challenges for the German economy.

Domestic and international political uncertainties also pose significant risks to economic stability. In particular, concerns are growing over the protectionist and unpredictable economic policies of US President Donald Trump. If the US extends tariffs on European goods, Germany's export sector could face severe disruptions.

The head of the ifo Institute said in an interview that the instability caused by US policies is "poison" for the economy.

On the same day, German carmaker Audi announced an agreement with labor unions to cut about 7,500 jobs in Germany by 2029. The move is part of the company's strategy to cut costs and increase competitiveness.

At the same time, Audi confirmed plans to invest eight billion euros over the next five years in German factories to boost technological innovation and improve production lines.

Audi is not the only German carmaker facing job cuts. Volkswagen previously announced plans to lay off 35,000 employees in Germany, Porsche aims to cut 1,900 jobs and Mercedes-Benz is looking to reduce thousands of positions by 2027.

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