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GERMANY: Bundesbank Downwardly Revises 2025 Growth Projection by 0.9pp to 0.2%

GERMANY
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The Bundesbank downwardly revised their Germany growth projections, by 0.9pp to 0.2% for 2025 and by 0.6pp to 0.8% for 2026. This compares to IFO's 2025 growth projection of 0.4-1.1% released earlier this week.

  • A notable change in the drivers behind the growth projection appears to be the labour market, which the Bundesbank now does not see becoming an "engine for economic recovery" - as private consumption rises slower than expected before.
  • Elsewhere, Bundesbank expect a "gradual revival of export business". "The biggest uncertainty factor for the forecast at present is a possible increase in global protectionism", they also comment.
  • "Uncertainties also arise from geopolitical conflicts, the effects of structural changes and the direction of future financial and economic policy after the federal elections in February. Overall, the risks of even weaker economic growth and higher inflation currently predominate."
  • For German HICP, Bundesbank now see 2.4% and 2.1% in 2025/6 - downwardly revised by 0.3 and 0.1pp, respectively.
Bundesbank Forecasts % Y/Y20232024202520262027
Real GDP. calendar adjusted-0.1-0.20.20.80.9
HICP6.02.52.42.11.9
Core HICP5.13.32.41.92.0
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The Bundesbank downwardly revised their Germany growth projections, by 0.9pp to 0.2% for 2025 and by 0.6pp to 0.8% for 2026. This compares to IFO's 2025 growth projection of 0.4-1.1% released earlier this week.

  • A notable change in the drivers behind the growth projection appears to be the labour market, which the Bundesbank now does not see becoming an "engine for economic recovery" - as private consumption rises slower than expected before.
  • Elsewhere, Bundesbank expect a "gradual revival of export business". "The biggest uncertainty factor for the forecast at present is a possible increase in global protectionism", they also comment.
  • "Uncertainties also arise from geopolitical conflicts, the effects of structural changes and the direction of future financial and economic policy after the federal elections in February. Overall, the risks of even weaker economic growth and higher inflation currently predominate."
  • For German HICP, Bundesbank now see 2.4% and 2.1% in 2025/6 - downwardly revised by 0.3 and 0.1pp, respectively.
Bundesbank Forecasts % Y/Y20232024202520262027
Real GDP. calendar adjusted-0.1-0.20.20.80.9
HICP6.02.52.42.11.9
Core HICP5.13.32.41.92.0