German media: Getting out of negative growth, is the German economy on the road to recovery?

After two years of recession, the German economy showed a slight growth in 2025. However, the situation for Germany's export economy remains severe, especially in the important automotive and chemical industries.

According to preliminary data released by the German Federal Statistical Office on Thursday, January 15, the real GDP of Germany increased by 0.2% year-on-year in 2025.

Statistical officials explained that the slight increase in GDP was mainly due to "increased private and government consumption." Private household consumption in Germany increased significantly in the first half of the year, but growth was "negligible" in the second half. Government consumption increased mainly due to increased social security expenditures in healthcare and long-term care.

However, Germany's export economy remained weak last year. In addition, investments in industrial equipment and construction declined again. The statistical office believes that the special fund used by the federal government for infrastructure and climate protection did not have a significant promoting effect last year.

Director of the Federal Statistical Office, Brand (Ruth Brand), also emphasized that the value added by manufacturing continued to decline for the third consecutive year. She added, "The two key industrial sectors, automotive and mechanical engineering, both suffered losses. The value added by the chemical industry and other energy-intensive industries was slightly lower than the already low level of previous years." Overall, export-oriented industries were hit by "the US increasing import tariffs" and "intensified international competition" (especially from China).

Regarding the labor market, Brand pointed out that the long-term positive trend ended in 2025. The number of employed people decreased, especially in the manufacturing sector. Moreover, the Federal Statistical Office noted that compared to other countries, Germany's current economic development momentum has fallen behind. Countries such as Spain and Poland have significantly faster economic output growth.

The German Federal Ministry for Economic Affairs and Climate Action stated on Thursday that after economic development stagnated in the third quarter of 2025, it "slightly rebounded" by the end of the year. With the gradual implementation of "fiscal stimulus measures," economic activity is expected to stabilize further and continue to grow in 2026. However, given the low market sentiment indicators, "there are no signs of a comprehensive economic recovery yet."

In 2024, Germany's GDP shrank by 0.5%, and in 2023, the decline reached 0.9%. Main economic research institutions lowered their forecasts for 2026 in December. The German Economic Experts' Committee currently predicts that this year's GDP will grow by 0.9%.

Sebastian Dullien, director of the Institute for Macroeconomics and Business Cycles at the Hans-Böckler Foundation (IMK), expects that the impact of the special investment fund and the continuously growing defense spending will "first show a significant effect in promoting economic growth in 2026." He also expects a recovery in housing construction.

Philipp Scheuermeyer, an economic expert at the KfW, expects that "due to a significant increase in government spending, as well as possible spillover effects on private investment, economic growth will accelerate significantly in 2026." However, he also pointed out that structural challenges and geopolitical risks still exist.

Source: DW

Original article: toutiao.com/article/1854433359125504/

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