German economy remains in the doldrums, set to recover gradually

German economy will recover from its prolonged period of weakness very slowly, growing by only 0.2% this year.

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German industrial orders stagnated in February and January's drop was revised to be less steep, showing that Germany's industrial sector slump could have bottomed out, but the recovery may be slow as the impact of US tariffs takes hold.

A Reuters poll of analysts had pointed to a rise of 3.5 per cent, but orders remained unchanged compared with the previous month on a seasonally and calendar adjusted basis, the federal statistics office said on Friday.

The less volatile three-month on three-month comparison showed that new orders in the period from December to February were 1.6 per cent lower than in the previous three months.

"The order situation remains bleak," said Alexander Krueger, chief economist at Hauck Aufhaeuser Lampe Privatbank. "US tariffs are putting even more pressure on industry and job losses are likely to continue." Meanwhile the German economy will recover from its prolonged period of weakness very slowly, growing by only 0.2 per cent this year, according to the new forecasts of Germany's banks' association, seen by Reuters on Wednesday.

The association had previously forecast growth of 0.7 per cent for this year in its forecasts published in September.

The economy is not expected to recover noticeably until 2026, with growth of 1.4 percent, the Association of German Banks said.