German gross domestic product was 0.2% higher in 2025

Positive Signs for the German Economy

Germany's GDP reported a 0.2% growth in 2025, which may alleviate stagflation concerns temporarily. This marks the first positive momentum since 2022, following contractions of 0.9% in 2023 and 0.5% in 2024.

Rise in Consumer Spending

The growth is primarily driven by increased consumer spending from private households and the government. However, exports continued their declining trend due to U.S. tariffs, stronger euro, and increasing competition from China.

Weakness in Investments and Manufacturing

Overall investment remains weak, with both equipment and construction seeing softer numbers compared to last year. The manufacturing sector has faced its third consecutive year of decline, particularly in automotive and mechanical engineering.

Challenges in Construction

High construction prices have severely hampered building activities, while the services sector showed mixed results. Consumer spending has been the bright spot, with households spending largely on healthcare and mobility.

Fiscal Scenario

Germany's deficit ratio stood at 2.4% in 2025, remaining below the European Stability and Growth Pact's reference value of 3%. Nonetheless, continued caution is advised regarding the overall economic balance.