BERLIN, April 10 (Xinhua) -- Germany's economy is projected to grow by 0.1 percent in 2025, according to a joint forecast released on Thursday by the country's leading economic think-tanks, marking a sharp downgrade from the previous forecast of 0.8 percent issued in autumn 2024.

The revision is attributed to mounting headwinds from newly imposed U.S. tariffs and continued domestic policy uncertainty.

"The German economy remains in crisis," the report stated, highlighting significant shifts in both domestic and international policy since the start of this year.

A key concern is the 25-percent tariffs on car imports imposed by U.S. President Donald Trump, which came into force on April 3. The move poses a major threat to Germany's export-reliant automotive industry. In 2024, Europe's largest economy exported around 3.4 million new vehicles, with the U.S. accounting for the largest share -- 13.1 percent.

The report warned that the U.S. tariff policy, particularly the car duties, would dampen growth momentum more obviously in summer, reducing GDP by 0.1 percent in both 2025 and 2026. It added that additional tariffs recently introduced by Washington have not yet been factored into the projection and could further delay recovery more severely.

To counter economic stagnation and address infrastructure deficits, Germany has amended its basic law to pave the way for higher public borrowing. The resulting expansionary fiscal policy is expected to be one of the few positive factors to support the economy, with GDP forecast to grow by 1.3 percent in 2026. Still, that figure is 0.8 percentage points below the previous forecast.

However, the report cautions that fiscal stimulus measures alone will not be enough. Germany is grappling not only with cyclical weakness but also with deep-rooted structural challenges.

Torsten Schmidt, head of economic research at the RWI-Leibniz Institute for Economic Research, one of the five institutes behind the report, pointed to a shortage of skilled labor and high bureaucratic hurdles as key structural issues, emphasizing the urgent need for reforms to strengthen the country's growth potential. Enditem

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