Economists warn that Germany's GDP will shrink again this year, and Trump's tariff threats are worsening market concerns.

According to the latest survey, economists have lost confidence in the prospect of Germany's economy avoiding two consecutive years of output contraction. Analysts now expect Germany's Gross Domestic Product (GDP) to contract by 0.1% in 2024, with a decrease of 0.3% in 2023. Just a month ago, they predicted that the German economy would stagnate this year. For 2025, their full-year forecast has been revised downward from 0.8% to 0.7%, while the growth rate for 2026 is expected to be 1.3%, consistent with previous survey results. Despite unexpectedly achieving 0.2% growth in the third quarter as the largest economy in Europe, Germany avoided a technical recession, but the economic decline in the previous April to June period exceeded the initially reported 0.3%. More detailed information on the economic driving factors for this quarter will be released on Friday. Furthermore, due to the re-election of Donald Trump and the instability of the German government, economic prospects have become even more uncertain. German central bank chief Joachim Nagel issued a warning this week that the trade tariffs threatened by Trump could result in a 1% decrease in German economic output. He further pointed out that even without US tariffs, economic growth in Germany for the next year is expected to be less than 1%, which could actually lead to negative growth in output. The survey also shows a divergence in economists' views on the potential impact of Trump on the German economy. Among those economists who have adjusted their GDP forecasts due to the possibility of Trump returning to the White House, many expect the economy to decline by 0.1 or 0.2 percentage points. However, economists at the Baden-Wrttemberg Bank believe that by 2025, economic output could decrease by 0.9 percentage points.