The Turkish currency has lost nearly 40 percent of its value against the dollar this year, hit a worsening diplomatic rift with the US.
In a report released today, Berlin’s finance ministry raises concerns about the “new economic risk” posed by Turkey.
Germany is the second biggest foreign investor in Turkey, whose biggest trading partner is the European Union.
The document also raises fears about the possibility of a no-deal Brexit and trade frictions with US leader Donald Trump.
It says: “Risks remain particularly with regards to uncertainty over how Brexit is going to pan out as well as future US trade policies.
“The persistent debate about tariffs and the threat of a trade war are choking trade activity.”
“The economic developments in Turkey present a new, external economic risk.”
Despite the looming threats to Berlin’s financial stability, the report adds that Germany‘s economy remains “buoyant”.
It says that companies are expected to raise investments as the global economy remains in good shape.
The lira’s slide has deepened amid a bitter row between Ankara and Washington over the trial of a US pastor in Turkey.
A court on Friday rejected Andrew Brunson’s appeal for release, sparking a furious rebuke from White House chief Mr Trump.
The US leader told reporters: “They should have given him back a long time ago, and Turkey has in my opinion acted very, very badly.
“So, we haven’t seen the last of that. We are not going to take it sitting down. They can’t take our people.”
Mr Brunson, an evangelical Christian missionary from North Carolina, has lived in Turkey for two decades.
He is being held on terrorism charges, which he denies.
Jay Sekulow, Mr Trump’s lawyer who is also representing Mr Brunson’s family, said he was “hopeful” the pastor would be released.
He said: “Diplomatic negotiations hit speed-bumps and that’s not unusual in these kinds of situations.
“We remain hopeful there will be a prompt resolution. Having said that, we fully support the president’s approach.”