Germany's government lowered its 2025 economic outlook, now expecting stagnation instead of the previously projected 0.3 per cent growth, a source told Reuters on Tuesday, confirming an earlier Handelsblatt report. For 2026, the economy is forecast to expand by 1 per cent, slightly below January's 1.1 per cent projection. The downgrade comes amid mounting concern over the US tariffs and weakening exports, which are expected to shrink by 2.2 per cent this year, following a 1.1 per cent drop in 2024. A mild recovery of 1.3 per cent is seen in 2026. Germany has already endured two consecutive years without growth and risks a third, which would mark an unprecedented run of stagnation for Europe's largest economy. Earlier this month, leading economic institutes slashed their 2025 growth outlook to 0.1 per cent from 0.8 per cent. The government anticipates inflation will fall to 2 per cent this year and to 1.9 per cent in 2026, compared with 2.2 per cent in 2024. Meanwhile, the unemployment rate is projected to rise to 6.3 per cent in 2025 from 6.0 per cent last year, before easing to 6.2 per cent in 2026. The economy ministry declined to comment on the forecasts, citing a press conference scheduled for Thursday. Attribution: Reuters Subediting: Y.Yasser
