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Investing.com - Germany's economic situation is "very serious", with growth in the country tipped to contract for a third consecutive year in 2025, Reuters reported on Tuesday, citing Germany's BDI industry association.
Despite expectations that the Eurozone currency area will expand by 1.1% this year and the global economy by 3.2%, Germany -- Europe's largest economy -- is seen shrinking by 0.1%, BDI said.
Should the 2025 contraction come to pass, it would be the first time since Germany was reunified that it has shrunk for three straight years.
"Growth in industry in particular has suffered a structural break," BDI President Peter Leibinger said, according to Reuters.
A jump in competition from international rivals, elevated energy costs, high interest rates and broad economic uncertainty have dented activity in Germany, long viewed as the powerhouse of Europe.
However, Leibinger argued that the crisis has largely been made in Germany, with governments unable to address structural weakness in the national economy.
Many analysts have maintained a pessimistic outlook for the country. Monthly data from the Ifo Institute earlier this week showed that business expectations in Germany were at their lowest level in a year in January.
Analysts at Capital Economics noted that the German economy is "clearly still struggling", even after Ifo's business climate index unexpectedly improved in January and a monthly gauge of private-sector activity released last week stabilized.
Meanwhile, a spat over how to revive Germany's economy contributed to the fall of the country's governing coalition overseen by Social Democratic Chancellor Olaf Scholz. Germany will hold a snap national election on February 23.
The country's conservative opposition party is on track to win the vote by a sizeable margin, polls have indicated, with Friedrich Merz tipped to become the next chancellor of Germany. Merz has called on the EU and the US to work to agree on a free trade deal instead sliding into a standoff over tariffs.
(Reuters contributed reporting.)
