Bundesbank: German economy losing momentum, US tariffs weigh heavily

25 February 2025, Hesse, Frankfurt/Main: A stele with the inscription "Deutsche Bundesbank Eurosystem" stands in front of the Bundesbank headquarters. Photo: Arne Dedert/dpa Credit: Arne Dedert/dpa

Germany’s central bank, the Bundesbank, has reported that the country’s economy lost momentum again in the second quarter, and warned that the imposition of US tariffs would have a further dampening effect on the economy.

Gross domestic product is likely to have stagnated in the second quarter, the Bundesbank wrote in its latest monthly report, published on Wednesday.

In the first three months, the German economy grew by a surprising 0.4% because companies brought forward deliveries in anticipation of US tariffs and industrial production picked up. Now the advance effects are wearing off, according to the Bundesbank.

At the same time, it warned of “additional headwinds” for German exports due to the US tariff policy. US President Donald Trump announced tariffs of 30% on imports from the EU from August 1, if no agreement is reached with Brussels before then.

If the tariffs come into force as threatened, they would pose a “considerable economic downside risk” for the German economy, the Bundesbank said.

The bank continues to view the underlying economic trend in Germany as weak, and has already predicted stagnation for this year. This means that the German economy is facing its third consecutive year without growth in 2025, something that has never happened before in the history of the Federal Republic of Germany.

Source: dpa.com

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