Is Germany on economic downturn?  

ParsToday - Germany, as the largest economy in Europe, is facing rising unemployment and inflation.  

The increase in unemployment and inflation has impacted the outlook of Europe's largest economy. According to a report by ParsToday citing IRNA, this is while Germany is faced with the prospect of the full impact of tariffs imposed by the United States.

The website of the news network *CNBC* reported: Preliminary data shows that inflation in Germany was higher than expected in August, registering at 2.1 percent. This figure was above the analysts' forecast, which had predicted in a Reuters poll that inflation in Germany would reach 2 percent. 

Data from Germany's Federal Employment Agency also showed that the number of unemployed individuals in the country increased to 3.25 million in August, reaching a rate of 6.4 percent.

Germany's economy is heavily reliant on exports and has been hovering near recession for some time. The country's Gross Domestic Product (GDP) grew by 0.3 percent in the first quarter of the current year but declined by 0.3 percent in the following period.  

Carsten Brzeski, Global Head of Macro Economics at the international banking group ING, stated regarding this situation: "We need to see how European and American companies will react to U.S. tariffs. While one scenario could involve price reductions in the Eurozone due to excess capacity and weaker sales in the U.S., globally active companies may try to increase prices in Europe to compensate for reduced profits in the U.S."

Brzeski noted that the increase in inflation in Germany has now undermined the case for further interest rate cuts by the European Central Bank (ECB) at its September meeting.

According to this economist's analysis, if Germany’s labor market growth slows down, the probability of wage hikes will decrease. However, given that inflation in August exceeded expectations, the ECB is likely to exercise more caution when considering additional interest rate cuts.

A group of economic advisors to the German government had earlier warned that the tariff war launched by the U.S. President, combined with other factors, would lead to zero economic growth in Europe’s strongest economy for the third consecutive year.