Name: Germany edges back into growth after two years of contraction
Uploaded: 2026-01-15T18:28:40.722Z
Duration: 1 min
Description: Europe’s largest economy returned to modest expansion in 2025, as stronger consumer and government spending offset weaker exports hit by higher U.S. tariffs.

Europe’s largest economy returned to modest expansion in 2025, as stronger consumer and government spending offset weaker exports hit by higher U.S. tariffs.

Berlin

Germany's economy saw a return to growth in 2025, with gross domestic product expanding by 0.2% after two consecutive years of contraction. This modest recovery was supported by higher consumer and government spending, which helped offset previous underinvestment.

However, the country continued to face significant challenges, including declining exports due to restrictive U.S. trade policies, increased defense spending following Russia's invasion of Ukraine, and higher energy costs. Competition from China and a stronger euro also contributed to difficulties for Germany's export-oriented industries.

Germany edges back into growth after two years of contraction

Germany's troubled economy returned to modest growth last year after two years of falling output. The expansion in gross domestic product of 0.2 percent for 2025 was fueled by stronger consumer and government spending to make up for years of underinvestments. On the other hand, exports sagged under the weight of more restrictive U.S. trade policy under President Donald Trump. Meanwhile, defense spending is rising due to a perceived higher level of threat from Russia after its invasion of Ukraine. Germany has endured a period of extended stagnation following the COVID-19 pandemic. Higher energy costs following the war in Ukraine and increasing competition from China in key German specialties such as cars and industrial machinery have held back an economy that is heavily focused on exports. A stronger euro has also made exports less competitive on price.

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