MNI BRIEF: German Experts' Council Slashes Growth Outlook

The German Council of Economic Experts cut its outlook for 2025 GDP growth cut by 0.9 percentage point compared with a year earlier to 0.0% in 2025, and by 0.1 percentage point to 1.0% in 2026, it said in its Spring Report on Wednesday.

CPI inflation should average 2.1 % in 2025 and 2.0 % in 2026, with core inflation at 2.5 % and 2.3 %, respectively, it said.

That outlook is dependent on the effects of U.S. tariff policy and how the German government deploys its fiscal package, with a risk that the fiscal package leads to sharper prices rise, particularly if additional funds are used to replace core budget spending rather than necessary investment. It is “highly uncertain” whether the fiscal package is compatible with EU fiscal rules. (See MNI INTERVIEW: German Defence Drive Brings Eurobonds Closer)

Europe’s economy is expected to grow by 1.1% in 2025 and 2026, and the global economy by 2.1% in both years.