By Maria Martinez
BERLIN, Jan 21 (Reuters) - Germany's economy could grow by 1% in 2026 if new U.S. tariffs are avoided, the BDI industry association said on Wednesday, but warned the industrial outlook remains fragile.
"Economic growth of 1% would be a hopeful sign after three years of stagnation," BDI President Peter Leibinger said in Berlin.
The BDI forecasts 2026 growth of 1.1% in the euro zone, with Germany in the lower middle of the bloc, and growth of around 3% for the global economy.
EUROPE MUST
SHOW STRENGTH, SAYS BDI PRESIDENT
The BDI urged the government to put competitiveness, growth and jobs at the centre of policy as global uncertainty rises and fresh U.S. tariff threats add pressure on export-driven economies in Europe.
Leibinger said Europe must respond to tariff threats with unity and confidence, arguing that only a competitive and resilient EU can act from a position of strength.
EU leaders are set to discuss options to reply to the new threats.
One option is a package of tariffs on 93 billion euros ($109 billion) of U.S. imports that could automatically kick in on February 6.
Asked about counter-tariffs, Leibinger said it is time to "show strength."
Another option is the so far untested "anti-coercion instrument", which could limit access to public tenders, investments or banking activity, or restrict trade in services, in which the U.S. has a surplus with the bloc, including in digital services.
Regarding the use of the instrument, Leibinger said "it should be kept in the reserve."
INDUSTRY WILL REMAIN FRAGILE
The BDI said industry would likely expand more slowly than the overall economy this year, forecasting modest growth of 0.3%.
"Only if we now give top priority to strengthening competitiveness and growth can we stop the downward trend in industrial production," Leibinger said.
He called for reforms with measurable implementation, including cutting bureaucracy, speeding up permitting for industrial projects and allowing more flexible working-time models.
"2026 will determine whether, after years of stagnation, we lay the foundations for a sustainable upswing and thus safeguard Germany as an industrial location," Leibinger said.
The BDI has submitted 253 proposals to reduce red tape, Leibinger said, and argued that bringing forward a cut in corporate tax could provide growth impulses as early as 2026.
($1 = 0.8546 euros)
(Reporting by Maria MartinezEditing by Ludwig Burger and Toby Chopra)
