Germany’s economy contracted by 0.3% in the second quarter of 2025, according to new data released by the Federal Statistical Office. This is a sharper decline than initially estimated and marks a worrying trend for Europe’s largest economy.
The contraction was driven by weaker-than-expected industrial production and construction output in June, as well as private consumption that was revised down after service-sector statistics pointed to weaker demand. Exports of goods and services edged 0.1% lower, while imports rose strongly.
This development is a significant concern for the German government, which has been under pressure to revive growth in its economy. The country’s export-driven economy has been hit hard by trade tensions with the US, particularly after US President Donald Trump imposed tariffs on April 5. Germany’s economy has now contracted for two consecutive quarters and faces the prospect of a third straight year of contraction, making it a rare occurrence in the country’s post-war history.
The new government is under pressure to implement bold reforms to strengthen Germany’s competitiveness and stimulate growth. Economy Minister Katherina Reiche has called for rapid structural reforms, including measures to reduce non-wage labor costs, cut back bureaucratic hurdles, and lower energy prices. She warned against raising taxes, saying the tax burden for companies in Germany is already high.
The news comes as Germany grapples with other pressing issues, including rising antisemitic incidents, the ongoing humanitarian crisis in Gaza, and the need to expedite Afghan resettlement rights.
Source: https://www.dw.com/en/germany-updates-economy-shrinks-more-than-expected/live-73728000