Germany’s GDP expanded by 0.2% in 2025, rebounding from a 0.5% contraction in 2024, according to preliminary estimates. The growth marked an end to a two-year period of economic contraction, supported mainly by higher household consumption and government spending. However, exports continued to decline, weighed down by higher US tariffs, a strong euro, and rising competition from China. Investment remained weak, with fixed capital formation in machinery, equipment, and construction falling compared with the previous year. By sector, manufacturing output fell for the third consecutive year, with the automotive industry and machinery and equipment manufacturing experiencing sharp losses. Construction also faced another difficult year, as high costs contributed to a rise in insolvencies. The services sector showed a mixed picture, with business services declining, while trade, transport, accommodation, and food services provided some support.
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