German economy expected to contract by 0.3% this year, DIHK says

By Maria Martinez

BERLIN, May 27 (Reuters) - The German economy is expected to contract by 0.3% this year, shrinking for a third consecutive year, the German Chamber of Commerce and Industry (DIHK) said on Tuesday, forecasting the longest period of weakness in Germany's post-war history.

The risk of recession persists, the DIHK said, but following a promising first quarter, its forecast was more optimistic than the previously forecast 0.5% contraction published in February.

Economic growth in the first quarter was significantly stronger than expected due to export and industry frontloading ahead of U.S. tariffs.

Germany had been expected to be badly affected by tariffs due to its export-oriented economy. The U.S. was Germany's biggest trading partner in 2024 with two-way goods trade totalling 253 billion euros ($288.02 billion).

The DIHK forecasts German exports to decline by 2.5% in 2025, also contracting for a third consecutive year.

A DIHK survey, conducted among 23,000 companies from all sectors and regions, showed that 29% of the companies expect exports to fall over the next 12 months, while only 19% expect exports to rise.

($1 = 0.8784 euros)