Gross domestic product expansion of 0.2% by 2025 was driven by higher consumer and government spending, while exports fell under the weight of a more restrictive U.S. trade policy under President Donald Trump, Germany’s Federal Statistical Office said on Thursday.
This follows a contraction of 0.5% in 2024 and 0.9% in 2023.
“Germany’s export business faced strong obstacles due to higher US tariffs, the appreciation of the euro and increased competition from China,” the head of the statistical office, Ruth Brand, said in a statement accompanying the statistical release.
Expectations have risen that Germany will finally see stronger growth this year as Chancellor Friedrich Merz’s government implements plans to increase infrastructure spending to offset years of underinvestment. Meanwhile, defense spending is increasing due to a perceived higher level of threat from Russia following its invasion of Ukraine.
Germany has endured a period of prolonged stagnation following the COVID-19 pandemic. Higher energy costs after the war in Ukraine and growing competition from China in key German specialties such as cars and industrial machinery have held back an economy that is heavily focused on exports.
Then came Trump’s imposition of higher tariffs, or import taxes, on goods from the European Union. Slow growth has also exposed long-term structural problems, such as excessive bureaucracy and a lack of skilled labor. A stronger euro has also made exports less price competitive. A group of leading economists have forecast 0.9% growth this year, but said that forecast could be at risk if the increase in public spending unfolds more slowly than expected.
The German economy grew by 0.2% in the last three months of 2025, according to the preliminary data available. (AP)
