The Munich-based ifo Institute for Economic Research has lowered its economic growth forecast for Germany in its latest report released on Monday.
The institute now expects Germany's GDP to grow by only 0.2 percent this year, a 0.2 percentage point downgrade from its previous prediction.
The report highlights weak industrial demand and increasing global competition as key challenges for Germany's economy.
In addition, domestic and international political uncertainties pose significant risks to economic stability. Notably, concerns are mounting over the protectionist and unpredictable economic policies of U.S. President Donald Trump. If the U.S. expands tariffs on European goods, Germany's export sector could face severe disruptions.
Clemens Fuest, president of the ifo Institute, said in an interview that the instability caused by U.S. policies is "poison" for the economy.
On the same day, German automaker Audi announced an agreement with its labor union to cut approximately 7,500 jobs in Germany by 2029.
The move is part of the company's strategy to reduce costs and enhance competitiveness.
At the same time, Audi confirmed plans to invest eight billion euros (around 8.7 billion U.S. dollars) over the next five years in its German factories to drive technological innovation and upgrade production lines.
Audi is not the only German automaker facing job cuts. Volkswagen previously announced plans to lay off 35,000 employees in Germany, Porsche intends to cut 1,900 jobs, and Mercedes-Benz aims to reduce thousands of positions by 2027.
US economic policy uncertainty weighs on Germany’s growth outlook
US economic policy uncertainty weighs on Germany’s growth outlook
