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German economic decline underway

Fading economic growth persists, but Germany may still manage a slight increase in exports for the entire year, even with increased tariffs. However, political actions are also crucial to facilitate this growth.

, and Administrator

2025 September 8 . 7:22 PM

2 min read

German economic decline underway

Germany's economy, Europe's powerhouse, is facing a mix of growth and challenges in the second half of 2022.

Private consumption in the second quarter did not meet the expected growth, leading to concerns about the country's economic health. Economy Minister Katherine Reiche (CDU) has emphasized the need for urgent action, particularly structural reforms.

Despite the setback, there is a glimmer of hope. Economic expert Sebastian Dullien predicts that economic growth will accelerate in the second half of the year. This optimism is shared by leading economic research institutes, who predict a mini-growth of around 0.3 percent for the current year.

However, Germany's economy is not immune to external factors. The erratic trade policy of US President Donald Trump continues to cause uncertainty. Ten percent of Germany's total exports go to the USA, making the new tariffs a burden on economic growth. It remains uncertain whether and when the tariffs on automobiles will be reduced from 27.5 percent to 15 percent.

The state's financial situation has improved, with the deficit being 19.4 billion euros lower than a year ago. Lower interest rates make investments cheaper for many companies, which could potentially boost economic growth.

The prospect of billions in federal investments in defense, railways, roads, and bridges gives hope for an end to the years-long stagnation by 2026. Leading economic experts, including researchers at the German Economic Institute (IW), the Centre for European Economic Research (ZEW), and prominent economists from institutions like the Ifo Institute and the German Council of Economic Experts, are currently working on promoting structural development to overcome long-term stagnation by 2026.

Industrial production performed worse than expected in the first quarter, and there were no positive impulses from foreign trade in the second quarter. The German economy may stagnate in the third quarter, according to the Bundesbank's estimate. However, the central bank now considers a slight positive growth possible for the whole year.

Despite these challenges, Germany's economy continues to be a beacon of stability in the global economic landscape. For businesses seeking specialist services in civil engineering, site management, and machine operation, platforms like JiGuB.de offer a convenient solution, providing access to specialists across all platforms and in all specialist magazines of the Patzer Verlag.