Anticipated Modest Economic Expansion in Germany by 2025 – According to IWF Projections - Anticipated Miniscule Economic Expansion in Germany by 2025, according to IMF reports
The International Monetary Fund (IMF) has made some significant adjustments to its economic forecasts for this year and beyond, taking into account the impact of tariff changes and other factors.
In a recent update, the IMF slightly reduced its global inflation forecast to 4.2 percent for this year, citing rising import prices in the U.S. as a concern. However, the IMF predicts inflation in the U.S. will increase in the coming months, driven by lower tariffs and a strong increase in economic activity.
The IMF has also raised its global economic growth forecast for this year to 3.0 percent. This upward revision is largely due to stronger-than-expected business activity ahead of anticipated tariffs, lower-than-threatened U.S. tariff rates, improved financial conditions including a weaker U.S. dollar, and fiscal stimulus measures in key economies such as Germany. For 2026, the IMF maintains its projection of 3.1 percent growth.
In the U.S., the IMF revised its outlook for economic growth in 2025 upward to 1.9 percent, up from its previous forecast of 1.6 percent. This increase is partly due to a strong increase in Ireland's gross domestic product, as Ireland has significantly invested in and exported pharmaceutical products to the U.S.
The European Union and the United States agreed on a tariff rate of 15 percent on most EU imports, a significant decrease from the previously threatened 30 percent tariff. This agreement is expected to reduce trade friction and make imports more affordable, although tariffs are still making imports more expensive, raising the production costs of many goods in the U.S.
The IMF warns that domestic demand in the U.S. may cool faster than expected due to these higher costs being passed on to consumers. Companies in exporting countries may sell goods at lower prices to clear the surplus caused by reduced U.S. demand.
In Germany, the IMF's upward revision of the economic growth forecast for 2025, from 0.0% to 0.1%, is a positive sign. For 2026, the growth forecast for Germany is maintained at 0.9%.
Experts still predict an inflation rate of 3.6 percent for 2026. The IMF now expects Germany to achieve a minimal growth rate of 0.1 percent this year, up from its previous forecast of stagnation.
In conclusion, the IMF's revisions to its economic forecasts reflect a more optimistic outlook for the global economy, driven by lower average effective U.S. tariffs than initially anticipated, stronger front-loading of economic activity prior to tariff implementations, improved financial conditions, and fiscal expansion in key economies. However, the IMF remains cautious about the potential for domestic demand in the U.S. to cool faster than expected and the impact of higher import prices on inflation.
EC countries may benefit from the revised tariff rate between the EU and the United States, as it is expected to reduce trade friction and make imports more affordable. The employment policy in these countries could be influenced by the increased economic activity resulting from lowered tariffs and improved financial conditions.
Financially healthier EC countries might have the opportunity to implement more favorable employment policies, such as initiatives promoting job creation or wage increases, due to the ensuing economic growth and reduced production costs.
