Financial News: German Economy Bounces Back In 2025

German Economy Bounces Back In 2025

(RTTNews) - The German economy expanded in 2025 after two years of recession as household and government spending offset weakness in exports and investment.

Gross domestic product posted an annual growth of 0.2 percent in 2025, reversing the 0.5 percent fall in 2024 and the 0.9 percent decline in 2023, Destatis reported Thursday.

"After two years of recession, the German economy edged back into growth," Destatis President Ruth Brand said.

The growth was primarily attributable to increased household final consumption expenditure and government final consumption expenditure, Brand noted.

On the other hand, exports recorded another decline as export business faced strong headwinds owing to higher US tariffs, the appreciation of the euro and increased competition from China, said Brand.

Investment also remained weak, with declines in both fixed capital formation in machinery and equipment and in construction, Brand added.

With households spending more on health, household consumption expenditure grew 1.4 percent. At the same time, government spending climbed 1.5 percent.

In contrast, gross fixed capital formation was down 0.5 percent. Gross fixed capital formation in construction slid 0.9 percent, marking the fifth consecutive decrease. Gross fixed capital formation in machinery and equipment declined even more sharply by 2.3 percent.

Exports registered a further decrease of 0.3 percent, the third in succession. On the other hand, following two years of decline, imports grew strongly by 3.6 percent largely reflecting higher imports of machinery, electrical equipments, pharmaceutical products and food.

"An economic liftoff is clearly in the making, and we expect some 1% GDP growth for this year," ING economist Carsten Brzeski said.

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