Association of German Banks expects country’s economy to recover slowly

The Association of German Banks expects the country’s economy to recover very slowly after its prolonged period of weakness. Germany’s GDP is forecast to rise by only 0.2%, down from the previous projection of 0.7% growth. 

The group expects the German economy to recover noticeably only in 2026. By the end of next year, the country's GDP will increase by 1.4%. 

The German economy outlook has worsened this year due to Donald Trump's plans to impose 25% tariffs on automobile imports to the US. These duties will hit German automakers hard, the organization says.

According to Heiner Herkenhoff, CEO of the Association of German Banks, the country’s fiscal reforms will have a positive impact on its GDP growth in 2026.

Meanwhile, corporate investment is expected to decline in Germany in 2025. Herkenhoff also notes that their projected growth of 3.5% next year will be well below previous recoveries. Prior to the European debt crisis, corporate investment regularly increased by double-digits during periods of economic upswings, the CEO highlights.