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Berenberg Tweaks Lower Its German GDP Forecasts for This Year

BY MT Newswires | ECONOMIC | 08/07/25 10:53 AM EDT

10:53 AM EDT, 08/07/2025 (MT Newswires) -- The sharp drop in German industrial output in June by 1.9% month over month and the decline in Germany's surplus in goods trade from 18.5 billioneuros in May to 14.9 billion euros in June suggest that the German statistics office (Destatis) will have to revise down its flash estimate of Q2 gross domestic prouct growth from a 0.1% quarter-over-quarter contraction by at least 0.1ppt upon publishing its new estimate on aug. 22, sai Berenberg.

While the data had so far indicated that the slippage in Q2 GDP was no more than a minor setback after two quarters of growth, with gains of 0.3% quarter over quarter in Q1 2025 and 0.2% quarter over quarter in Q4 2024, the new data show a more pronounced reversal of fortunes in Q2.

Amid unusual shocks emanating from two key German export markets, the United States and China, the situation at home seems to be stabilizing even before the new fiscal stimulus gets going. For example, retail sales adjusted for inflation rose by 0.4% quarter over quarter in Q2, marking the fifth quarterly increase in a row. German consumers are opening their wallets at least "cautiously," pointed out Berenberg.

Following the drop in industrial output in June and the reduced surplus in goods trade, the bank now expects German Q2 GDP to be revised down from a 0.1% contraction to a 0.2% quarter-over-quarter decline. At the same time, the slightly more upbeat surveys for July prompted Berenberg to lift its call for Q3 from flat to 0.1% quarter-over-quarter growth.

These marginal changes lower Berenberg's forecast for the annual increase in GDP in calendar-adjusted terms for 2025 from 0.4% to 0.3%, and so back to the call the bank had before Destatis published its flash estimate for Q2. For 2026, Berenberg continues to project a rise of 1.1%.

In addition to further gains in private consumption, a modest recovery in private business investment and the ongoing increase in defense spending, additional infrastructure investment should become visible in the data next year.

MT Newswires does not provide investment advice. Unauthorized reproduction is strictly prohibited.

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