"The new U.S. administration has adopted an erratic and protectionist economic policy. Import tariffs already announced on goods from Mexico, Canada, and China and retaliatory tariffs are having initial negative impacts on the U.S. and global economies. If tariffs on European products are additionally increased, this could hit German export business hard," said Timo Wollmershäuser, Head of Forecasts at IfO. There are also uncertainties as regards to domestic politics, and over the size, timing and implementation of fiscal spending boosts, he said. (See MNI INTERVIEW2: Germany Faces Stagnation -Former Experts Chair )
The latest forecasts see no shift in inflation outlooks, with domestic CPI growth seen at 2.3% in 2025 and 2.0% in 2026.
According to ifo’s Head of Forecasts Wollmershäuser, this phase of uncertainty should soon be overcome: “Reliable economic policy is vital to creating confidence and stimulating investment. Companies need planning certainty, especially in view of the current challenges posed by structural change in industry.”