The boost promised by the government has yet to materialize, Germany’s economy showed no growth in the third quarter from July to September. According to preliminary data released by the Federal Statistical Office in Wiesbaden on Thursday, the country’s gross domestic product (GDP) remained stagnant. While investments in machinery and vehicles increased during the summer, exports of products “made in Germany” declined.
Compared with the previous quarter, the GDP remained unchanged after price, seasonal, and calendar adjustments, with a growth rate of 0.0 percent. In the first quarter of the year, GDP had grown by 0.3 percent, while in the second quarter from April to June, it declined by 0.2 percent after revised figures, previously, the decline was reported at 0.3 percent.
With the newly reported zero growth, Germany narrowly avoided a technical recession, which is generally defined as two consecutive quarters of economic contraction. “There is a lack of economic momentum,” said Helena Melnikov, Chief Executive of the Association of German Chambers of Commerce and Industry (DIHK). “Companies continue to be slowed down by high costs, extensive reporting requirements, and lengthy procedures.” She added that location factors in Germany remain a significant obstacle to international competitiveness.
The Federal Employment Agency (BA) also described the usual autumn upturn as “lacking momentum.” In October, the number of unemployed people fell by only 44,000 to 2.911 million. The unemployment rate decreased slightly by 0.1 percentage points to 6.2 percent. “Employment growth remains weak, and the demand for new employees is low,” said BA head Andrea Nahles.
Melnikov urged swift action: “Politics must now act urgently and improve the framework conditions for entrepreneurial activity.” She emphasized that the government’s announced reforms must be followed by concrete measures that bring noticeable relief to the economy. Businesses, she said, need lower energy and labor costs, as well as an earlier reduction in internationally high tax levels. “It is crucial that the federal government quickly and consistently implements its reform agenda,” Melnikov added.
The Kiel Institute for the World Economy (IfW) expects “little more than stagnation” for the entire year. While this would end the sharp declines in GDP seen in 2023 and 2024 despite U.S. tariffs and geopolitical tensions, the institute noted that GDP would remain “only at the level of 2019.” The German economy, it said, “has practically not grown for six years.”
The IfW forecasts that the economy will pick up next year due to federal spending. However, this expansionary fiscal policy is expected to trigger “little more than a short-lived economic spark,” as the German economy continues to suffer from structural issues. “The competitiveness of German companies has significantly deteriorated overall, and they are losing considerable market share,” the institute concluded.
Germany’s stagnating economy also slowed growth across the eurozone in the third quarter. According to preliminary estimates from EU statistics agency Eurostat on Thursday, GDP in the 20 eurozone countries grew by 0.2 percent compared to the previous quarter. While Italy’s economy also stagnated, France recorded a GDP increase of 0.5 percent.
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