According to data from the Federal Statistical Office (Destatis), the German economy contracted during the second quarter of 2025, reflected in a 0.3 % drop in Gross Domestic Product.

Among the causes of this contraction are the turbulence in global trade that is affecting domestic economic dynamics, with a less favorable development of industrial production coupled with “the poor order book situation.”

“Furthermore, the worsening labor market outlook and the slowdown in wage growth also played a role, directly affecting private consumption.”

It is important to remember that the European country’s economy has been experiencing a quarterly contraction since 2023 and 2024, which is increasing pressure on Chancellor Friedrich Merz to implement measures to help reactivate the economy.

However, the Bundesbank’s projections are not encouraging, as it anticipates “a course of stagnation for the third quarter” in the face of the Trump administration’s tariffs on the European Union and the increase in public spending, which “exceeded revenues in the first half of 2025.”

M.Pino

Source: DW

(Reference image source: Toru Wa on Unsplash)

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