German government cuts 2025 growth projection to 0.3%, Handelsblatt says

By Ludwig Burger

(Reuters) -The German government has slashed its growth projection for 2025 to 0.3% from 1.1%, the newspaper Handelsblatt cited government sources as saying on Friday, as the economy shows little sign of recovering from two years of contraction.

The Economy Ministry declined to comment.

Last year, Germany's economy shrank for the second consecutive year, burdened by competition from abroad, high energy costs, still-elevated interest rates and uncertain business prospects.

The German economy, Europe's largest, shrank by 0.2% over the full year, official statistics showed last week.

Disagreements over how to reinvigorate the economy were a main factor behind the collapse of German Chancellor Olaf Scholz's fractious three-party coalition last year.

The economy shows up as the top concern of German voters in surveys ahead of a national election on Feb. 23.

The previous prediction in October of 1.1% growth by the Economy Ministry, led by Deputy Chancellor Robert Habeck of the Green party, had already been thrown into doubt.

In December, Germany's three leading economic forecasters predicted growth rates between zero and 0.4% for 2025, in the absence of swift structural countermeasures.

Handelsblatt also said that the German government had lowered its 2026 growth projection to slightly more than 1% from 1.6%.

(Additional reporting by Maria Martinez in BerlinEditing by Miranda Murray, Rachel More and Kevin Liffey)

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