The hope of a recovery of the German economy has been postponed to the second half of the year: the minus in the spring was even clearer at 0.3 percent. Initially, the Federal Statistical Office had calculated a decline in economic output by 0.1 percent for the first quarter.
Industrial production in particular developed less than assumed. The “braking traces of the trade war” with the United States are deeper than suspected in the exporting nation Germany, analyzes KfW chief economist Dirk Schumacher. According to the Federal Office, private consumption also did not attract positive impulses from foreign trade in the second quarter in the second quarter.
Light at the end of the tunnel
Nevertheless, the mood in many companies has recently improved: lower interest rates make purchases cheaper, the prospect of federal billions in investments in defense, rails, streets and bridges gives hope for an end to the end of years of doldrums in 2026.
“Early indicators such as corporate surveys, building permits and order in order indicate that there is an acceleration of economic growth in the second half of the year,” says Sebastian Dullien, scientific director of the Institute for Macroeconomics and economic research (IMK) of the trade union Hans Böckler Foundation.
Become smaller
In addition, the state’s cash situation has improved. In the first six months of this year, the tax authorities of the Wiesbaden statisticians spent 28.9 billion euros more than it took. However, the deficit was significantly 19.4 billion lower than a year earlier.
Increasing social contributions – among other things through higher contributions to health and long -term care insurance – and higher tax revenue relieved the public funds. In relation to the entire economic output, the deficit of the federal government, the states, communities and social insurance was in the first half of 2025 at a comparatively low 1.3 percent. This is the best value for a first half of the year since the first half of 2022, at that time there had been a surplus of 0.2 percent according to recent calculations.
In 2024, the state deficit, according to the latest figures, rose to more than 115 billion euros, and there was a deficit rate of 2.7 percent. The European stability and growth pact allows the EU countries to have a budget deficit of a maximum of three percent and a total debt of a maximum of 60 percent of the nominal gross domestic product (GDP). In Germany, the gross bloses amounted to 62.5 percent of GDP in 2024.
Mini growth in the year seems possible
According to the Bundesbank, the German economy will not make big leaps in the current quarter: “In the third quarter, economic output could be roughly stagnating.” For the year as a whole, however, the central bank now considers an easy plus to be possible instead of stagnation. Leading economic research institutes also trust Europe’s largest economy after two years of recession with minus 0.9 percent 2023 and minus 0.5 percent in 2024 in the current year of a mini growth of around 0.3 percent.
The federal government wants to boost the economy with “growth booster” and “building turbo”. But after the first 100 days of the coalition led by Chancellor Friedrich Merz (CDU), many are sobered. “At the moment, almost all important reforms are missing because the SPD and also parts of the CDU/CSU block themselves,” said the ‘ingredient’ Veronika Grimm to the newspapers of the Funke media group. Therefore, there is no growth dynamics.
Federal Minister of Economics Katherina Reiche (CDU) sees “urgent need for action”: “It is now crucial to implement brave structural reforms quickly – for example in the flexibility of working hours, the damping of the non -wage costs, the reduction of bureaucratic hurdles and the reduction in energy prices.” At the same time, additional burdens would have to be avoided for companies, emphasized Reiche: “We have to talk about further reductions, not increases in the tax burden.”
Export nation Germany burdened by tariffs
US President Donald Trump’s erratic customs policy continues to ensure uncertainty. Most imports from the European Union to the USA have been in volunteers of 15 percent since August 7. Even after the latest announcements, it remains uncertain that “whether and when the tariffs are reduced to automobiles from 27.5 percent to 15 percent,” Ing ordered
In some cases, economists explain the clearer decline in the German gross domestic product in the second quarter as a counter -movement to the first three months: at the start of the year there was still a mini growth of 0.3 percent – because business was preferred for fear of higher tariffs.
This post was updated on August 22, 2025 at 12.43 p.m. with further information from the dpa.