As a whole, the German economy also posted 0.3% growth in GDP for the year 2025. That as private and government consumption expenditures, in particular, increased. Meanwhile, it was a very turbulent year for foreign trade – not least due to Trump’s tariffs surely. So, that definitely presented a more challenging environment for the German economy to navigate through.
The bright side is that higher and more stubborn price pressures are not quite eating too much into overall demand, with the services sector at least keeping firmer. The manufacturing side of things remain in struggling territory, so that will continue to be a bit of a pain as we get into the new year.
For now, Europe’s largest economy is keeping somewhat resilient and the hope is that overall conditions can hang in there all the way through until we see the fiscal tailwind kick into gear. However, a softening labour market picture could pose some concerns in the months ahead. So, that will be something to be wary about.
That as stagflation risks remain a potential point of worry for Germany and perhaps the euro area as we get into 2026.
