Germany lowers economic growth forecast due to US trade policy

The German government has recently downgraded its economic growth forecast and now expects GDP to stagnate this year. Federal Minister for Economic Affairs and Climate Action Robert Habeck linked such an adjustment to the adverse effects of US President Donald Trump's trade policies on the country’s ability to export.

Habeck noted that unfavorable external factors, coupled with a falling competitiveness of German cross border sales, are significant hurdles to the nation’s GDP growth. Moreover, he highlighted the chance for a 1% economic upturn next year, which could be attributed to the new government-backed investment package. 

Earlier, Bundesbank President Joachim Nagel warned of the risks of a third consecutive year for Germany with economic stagnation, citing potential impact of US tariffs. In addition, this week's Ifo Business Optimism Index showed a decline, reflecting business concerns over ongoing trade tensions despite expectations for increased government spending.