ECB’s Nagel: Trump Tariffs Could Put German GDP in the Red Next Year

13 November 2024

ECB’s Nagel: Trump Tariffs Could Put German GDP in the Red Next Year
Joachim Nagel, president of the German Bundesbank, at the ECB Central Banking Forum in Sintra on July 2, 2024. Photo by the ECB.

By Marta Vilar – MADRID (Econostream) – European Central Bank Governing Council member Joachim Nagel said on Wednesday that the German economy could take a hit of 1% in 2025 if US President-elect Donald Trump were to implement his tariff plans.

In an interview with German weekly Die Zeit, Nagel, who heads the German Bundesbank, said that this would mean that the German economy could enter negative territory in 2025, as economic growth then would likely be below 1%.

‘[O]ur country is facing a huge need for action. We need to get things moving as quickly as possible’, he said, regarding the political instability in Germany after the collapse of the current government.

Regarding the ECB’s monetary policy, Nagel described it as ‘on the right track’ and said inflation was now under control again.

Despite inflation being back around 2%, the job was still not done, according to Nagel, who highlighted still significant wage pressures and high core inflation in the Eurozone and Germany.

Timing is key for interest rate moves, he said, which is why the ECB stuck to its meeting-by-meeting, data-dependent approach.

 

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