Economic Buzz: German economy bounces back to growth after two years

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.

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.

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