Berlin (Reuters) – The German government has lowered its forecast for economic growth for 2025 and now expects the gross domestic product (GDP) to stagnate this year, instead of increasing 0.3% as an estimated above, a source in Reuters said on Tuesday, confirming information published earlier by the daily Handelsblatt.

For 2026, Berlin now forecasts growth of 1%, a slight decrease compared to January forecasts (1.1%), according to the source.

Asked about these forecasts, the Ministry of the Economy refused to comment, referring to a press conference on new projections scheduled for Thursday.

Germany is the only country in the G7 to have seen its economy contract in the past two years, and customs duties announced by US President Donald Trump could lead to a third year without growth.

German economic institutes have reduced their growth forecasts to 0.1% earlier this month for 2025, against a 0.8% forecast published in September, taking into account the first American customs duties on steel, aluminum and automotive.

German exports should also decrease by 2.2% this year, after a drop of 1.1% in 2024, and increase by 1.3% in 2026, said the source.

On the inflation front, the German government provides for a 2% slowdown in prices this year, after 2.2% in 2024, then to 1.9% in 2026, the source told Reuters.

The weakness of the economy will result in repercussions on the labor market, the unemployment rate having to drop from 6.0% last year to 6.3% in 2025, before falling to 6.2% in 2026.

(Report Holger Hansen and Christian Kraemer, written by Miranda Murray and Maria Martinez, Diana Mandia, edited by Blandine Hénault and Augustin Turpin)

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