13 May 2025 | Euro

IW Institute projects rising unemployment and falling GDP in Germany in 2025

IW Institute projects rising unemployment and falling GDP in Germany in 2025

Among developed countries, Germany is the only one forecast to face a decline in gross domestic product (GDP) in 2025. According to the IW Institute (Institut der deutschen Wirtschaft), GDP is expected to drop by 0.2%. Meanwhile, the US, the eurozone, and China are projected to grow by 1.3%, 0.8%, and 4%, respectively.

Both global tensions, including US tariffs, and domestic economic weakness are the main factors behind Germany's GDP decline. Currently, investment in the country remains low, while industrial and construction activity continues to contract.

The import duties imposed by the US in April have already impacted global indicators. According to IW estimates, without these measures, global GDP would have increased by 0.8%.

Tensions are also mounting in the German labor market. By summer, the number of unemployed people could reach 3 million, the highest since 2010.

According to IW, Germany is still in a recession. To recover, the country’s economic course needs to change. Institute representative Michael Groemling emphasizes the importance of revising the domestic business model.

Elena Dorokhina MarketCheese
Period: 30.06.2026 Expectation: 3000 pips
Buy SPX if Producer Price Index stays cool
Yesterday at 11:34 AM 18
Period: 11.07.2026 Expectation: 300 pips
Buying ETHUSD up to $1,950
Yesterday at 11:30 AM 21
Gold sell
Period: 18.06.2026 Expectation: 1200 pips
Sell gold with $3,980 target during brief rebound
Yesterday at 11:01 AM 24
Period: 11.07.2026 Expectation: 1500 pips
Invest in USDJPY ahead of BoJ meeting
Yesterday at 10:00 AM 21
Period: 31.07.2026 Expectation: 800 pips
Invest in USDJPY up to 161.50
Yesterday at 06:35 AM 20
Period: 31.07.2026 Expectation: 1900 pips
Selling GBPUSD down to 1,3200
Yesterday at 06:35 AM 16
Go to forecasts