German economy grows for first time in two years
By Abigail Townsend
Date: Thursday 15 Jan 2026
(Sharecast News) - The German economy expanded in 2025 for the first time in two years, official estimates showed on Thursday.
According to provisional figures from Destatis, the Federal Statistical Office, GDP rose 0.2% year-on-year, or 0.3% once adjusted for calendar effects.
It is the first time since 2022 that the German economy - Europe's largest - has expanded. Hit by weak consumer sentiment and mounting global competition, the economy contracted by 0.7% in 2023 and by 0.5% in 2024.
A combination of increased household and government expenditure drove the uplift last year.
Ruth Brand, Destatis president, said: "After two years of recession, the German economy edged back into growth."
She added, however, that in contrast, Germany's export business had continued to face "strong headwinds" during the year, owing to higher US tariffs, the appreciation of the euro and increased competition from China.
"In addition, investment remained weak, with fixed capital formation in machinery and equipment and in construction down on the previous year."
Carsten Brzeski, global head of macro at ING, said: "At first glance, 2025 offered little cause for optimism, sending the entire country into national depression.
"However, this morning's data suggest that this period of national gloom has come to an end.
"There are good reasons to finally be more positive about the German economy. The latest macro data indicate a clear turning point in industry; industrial orders have now increased for three consecutive months."
Brzeski also pointed to the German government's ambitious infrastructure and defence spending plans, which are set to finally reach the economy this year.
Holger Schmieding, chief economist at Berenberg, said: "More government spending will likely account directly for about 0.4 percentage points of the 0.7% rise in German GDP which we project for 2026.
"A rebound in residential construction, due to low interest rates, faster approval procedures and a worsening shortage of housing, will add to that.
"We expect Germany to reach a cyclical peak of 1.3% growth in 2027, when the stimulus reaches full force and consumers and business react to the more positive environment by also spending more."
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