Germany’s economy has slipped back into contraction territory after a slight uptick at the start of the year, according to figures released by the Federal Statistical Office. The country’s GDP shrank by 0.3% quarter-on-quarter from April to June, worse than the initial estimate of -0.1%. This marks a reversal of the growth seen in the first quarter.
The decline is largely attributed to industrial production, which underperformed expectations. Household consumption was also revised downwards due to new information on the services sector. Government final consumption expenditure and investments declined, while net exports suffered as well.
However, PMI data released by S&P Global suggests a more optimistic picture, with business activity rising for the third straight month in August. The government has taken steps to boost economic growth, including approving a constitutional amendment to its “debt brake” rule and creating a €500 billion fund for infrastructure spending.
The impact of US tariffs is also being felt, with 15% tariffs on most European goods weighing on economic growth. Annual GDP growth came in at 0.2% in the second quarter, compared to 0.3% in the first quarter.
Source: https://www.euronews.com/business/2025/08/22/germanys-gdp-contraction-worse-than-expected-after-tariff-boost