German economic outlook weaker in January amid bleak GDP forecast

LONDON (ICIS)–Germany’s economic outlook deteriorated in January on the back of a bleak GDP forecast and increasing inflationary pressures, research group ZEW said on Tuesday.

The ZEW Indicator for Economic Sentiment fell by 5.4 points from the previous month to 10.3 points.

Source: ZEW

The group said that two consecutive years of recession, with GDP contracting in 2023 and 2024, had caused expectations to fall.

In December, Germany’s central bank cut its 2025 and 2026 GDP growth projections for the country.

A lack of private household spending and subdued construction demand continue to stall Germany’s economy, the group’s president Achim Wambach said in a statement.

“If these trends continue in the current year, Germany will fall further behind the other countries of the eurozone.”

Domestic political uncertainty and a so-far unpredictable economic policy from the new Trump administration in the US also contributed to weaker sentiment, Wambach added.

The current economic situation indicator for Germany rose slightly by 2.7 points but was still firmly in negative territory at (minus) -90.4 points.

In the wider eurozone, the January outlook was more positive with a 1.0 point rise in the economic sentiment indicator to 18.0 points. The current situation was 1.2 points higher than in December but still negative at (minus) -53.8 points.

“The ZEW index is in line with the sentiment expressed in the December PMI numbers, which signaled that the European economy remains weak despite our expectations of a pick-up in momentum,” advisory firm Oxford Economics added in a statement.