New tariffs planned by US President-elect Donald Trump could cost Germany 1% of economic output if they take effect, German central bank President Joachim Nagel said in an interview with Die Zeit newspaper published on Wednesday.
“If the new tariffs are actually implemented, we could even fall into negative territory,” Nagel said, with Germany already struggling with weak growth this year and next.
According to him, the German economy is not expected to grow in 2024 and will probably grow less than 1% in 2025.
Nagel, who sits on the Governing Council of the European Central Bank, also expressed concern about the prospects of the German labor market, telling Die Zeit: “The jobs we are losing in industry may not be replaced as easily as before by new jobs in the service sector”.
He defended, as appropriate, the ECB’s current interest rate path.
The ECB has already cut interest rates three times this year, and new cuts at each of its meetings, at least until next April, are fully expected.
“Let’s not exaggerate. There is still considerable price pressure, which comes mainly from the service sector due to wages,” Nagel said.
Source: Terra
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