Ifo Institute Cuts German Economic Growth Forecasts as US Tariffs Hit Export Sector

05:10 AM EST, 12/11/2025 (MT Newswires) -- The ifo Institute now expects Germany's price-adjusted gross domestic product to edge up 0.1% in 2025, down from its previous forecast of a 0.2% rise. In its winter forecast released Thursday, the economic research firm said the downward revision reflects the continued negative impact of higher US tariffs on German exports. "The German economy is adapting only slowly and at great expense to the structural shift through innovation and new business models. In addition, companies and start-ups in particular are hindered by bureaucratic hurdles and an outdated infrastructure," the ifo said. "The uncertainty caused by the tariffs remains high, even though the acute conflicts between the US and the EU have been defused." For 2026 and 2027, economic growth is projected at 0.8% and 1.1%, respectively, both lower than the anticipated 1.3% and 1.6% expansion in the institute's autumn forecast. Meanwhile, the headline inflation rate in Germany is still expected to come in at 2.2% in 2025. For 2026, researchers now forecast the inflation rate at 2.2%, up from the previous 2.1% estimate. Ifo also lowered its inflation estimate for 2027 to 2.3% from 2.6%.