(Reuters) -The German economy is set to contract more than previously expected in 2025 as U.S. tariffs weigh on exports, the BDI industry association said on Monday, forecasting a 0.3% contraction in 2025.
In January BDI had forecast a 0.1% contraction, but flagged that changes to U.S. tariff policy might impact the export-driven economy further.
A contraction in 2025 would mark Germany’s third consecutive annual decline.
The U.S. was Germany’s biggest trading partner in 2024 with two-way goods trade totalling 253 billion euros ($288.02 billion).
“Nevertheless, there is a real chance of an upturn next year if the German government resolutely pursues the path it has taken,” BDI President Peter Leibinger said in a statement.
Leibinger welcomed initial steps taken by the current government, such as tax and energy price relief, but said further reforms were necessary.
BDI also offered the government support in strengthening Germany’s defence capabilities, with Leibinger saying that “German industry is ready to make its contribution.”
(Reporting by Christian Kraemer, Writing by Isabel Demetz, Editing by Friederike Heine)
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