Germany's Economy Grew for the First Time Since 2022

Signs of Growth in the German Economy

According to data released by the Federal Statistical Office of Germany, the gross domestic product grew by 0.2% in 2025. This growth is seen as a positive development following the contractions experienced in 2022 and 2023, and is in line with the average forecast from the Bloomberg analyst survey.

Fourth Quarter Growth

The growth in the fourth quarter also showed an increase of the same rate. The Federal Statistical Office indicated that the growth was driven by household consumption and government spending, while the decline in investments and the impact of trade on slowing growth were also noteworthy.

Challenges Facing the German Economy

The President of the Federal Statistical Office, Ruth Brand, stated, "After the recession, the German economy has returned to growth. This growth is based on increased household consumption and public spending."

In recent years, the largest economy in Europe has faced challenges such as the energy crisis, difficulties in access to critical inputs, and the impact of Donald Trump on global trade. Industrial sectors have been particularly adversely affected by these situations.

Investment Plans and Future Expectations

Chancellor Friedrich Merz's plan to spend hundreds of millions of euros to strengthen the military and improve deteriorating infrastructure has created optimism about economic revival, although there are still questions regarding the sustainability of this transformation.

Economists suggest that in the coming years, these expenditures will push growth above 1%, but reforms that support demand must accompany these investments.

Decline in the Automotive Sector

Recently, car manufacturers Volkswagen and BMW announced that they experienced significant declines in sales in the US and China. This decline has become more pronounced due to the US's tariffs and competition from Asian car manufacturers such as BYD.