News from 2025-02-25 / KfW Research
KfW Business Cycle Compass February 2025
The German economy is struggling to get any wind in its sails
The German economy is currently getting some lift from the monetary easing and higher real wages. Still, consumption remains subdued and investment is still muted. The threat of tariffs from the US is also clouding the outlook for exports. All in all, the sawtooth-shaped business cycle is likely to continue for the time being. KfW Research now expects GDP to fall again slightly by 0.2% this year. Real growth should pick up again moderately to 0.3% in 2026. Euro area GDP is likely to grow by 0.6% in 2025 and 0.8% in 2026. Inflation (HICP) will likely hit 2.2% in the euro area and 2.4% in Germany in 2025 as a result of persistent services inflation. It should fall to 2.0 and 2.2% in 2026.
KfW Business Cycle Compass February 2025
Further information about the KfW Business Cycle Compass
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