The upturn in the German economy is still a long time coming: after a decline in the spring, there was no growth in the third quarter either. The gross domestic product (GDP) stagnated compared to the previous quarter, as the Federal Statistical Office confirmed.
Economic output could increase slightly again as early as the final quarter of 2025, meaning that Europe’s largest economy would just miss the third year without growth for the year as a whole. Economists expect the slump to end next year – also because of government investments worth billions in infrastructure and defense.
Exports are weakening
In the period from July to September, companies invested more in machines, equipment and vehicles, as shown by the latest data from the Wiesbaden Federal Office: Investments in equipment increased by 1.1 percent compared to the previous quarter.
But exports of goods and services “Made in Germany” fell by 0.7 percent. Higher US tariffs are putting a strain on Germany as an export nation. Business on the Chinese market is also no longer going so well.
“The economy was slowed down in the third quarter by weak exports, while investments increased slightly,” summarized the President of the Federal Statistical Office, Ruth Brand.
Price increases slow consumers down
Increased prices for food and services are also slowing private consumption. For the first time since the final quarter of 2023, private consumption fell compared to the previous quarter (minus 0.3 percent) because households, for example, spent less money on restaurants. According to surveys, many consumers want to cut back even during the usually high-sales Christmas season. Many retailers fear for their economic existence.
The job market is already under pressure. In important sectors such as the automotive industry, almost 50,000 jobs were cut within a year. In addition, the autumn recovery on the German labor market was weak. For seasonal reasons, the number of unemployed is likely to rise again to more than three million in the winter months of January and February.