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German Economy Stirs: Modest Growth Emerges After Stagnation
15 Jan
Summary
- Germany's economy saw 0.2% growth in 2025 after two years of decline.
- Consumer and government spending drove the modest expansion.
- US trade policy and competition from China impacted German exports.
Germany's economy has returned to modest growth, with its gross domestic product expanding by 0.2% in 2025. This positive shift follows two consecutive years of economic shrinkage, offering a glimmer of hope after a prolonged period of stagnation. The latest figures from the German Federal Statistical Office indicate that domestic demand, particularly from consumers and the government, was the main driver behind this expansion.
However, the nation's crucial export sector continued to struggle against strong headwinds. Factors contributing to this included the appreciation of the euro, increased competition from China, and more restrictive trade policies enacted by the United States under President Donald Trump. These challenges have put pressure on Germany's export-oriented industries.
Looking ahead, hopes are high that planned government spending on infrastructure, such as bridges and rail lines, along with increased defense expenditures due to geopolitical tensions, will foster stronger growth in the coming year. Economists predict a 0.9% growth rate for 2026, though this forecast is contingent on the timely implementation of these government initiatives.
