In 2025, Germany’s economy continues to face serious challenges. After two consecutive years of GDP decline (0.3% in 2023 and 0.2% in 2024), the current year is characterized by stagnation, with GDP growth forecast at 0.0%. This makes Germany the only G7 country that has not shown economic growth in the last three years.
Key economic indicators
- GDP: In the first quarter of 2025, the German economy grew by 0.2%, avoiding a technical recession.
- Inflation: In April 2025, the inflation rate was 2.1%, indicating price stabilization.
- Unemployment: In April, the unemployment rate reached 6.3%, the highest level since December 2015, excluding the pandemic period.
- Consumer sentiment: The GfK consumer sentiment index improved to -20.6 points in May, indicating cautious optimism among the population.
Key challenges
- Trade tensions: New tariffs imposed by the administration of US President Donald Trump are putting pressure on Germany’s export-oriented industry, particularly in the automotive and metal sectors.
- Structural problems: Demographic change, a shortage of skilled workers, and high energy costs continue to hold back economic growth.
- Political instability: Delays in forming a new government after the February 2025 elections are creating uncertainty about economic policy.
Measures to stimulate the economy
The new government led by Chancellor Friedrich Merz, who is due to take office on May 6, is expected to present a package of measures to stimulate the economy. These include
- The creation of a €500 billion investment fund for infrastructure and defense.
- Reform of the tax system to reduce the tax burden on businesses.
- Simplification of bureaucratic procedures to stimulate entrepreneurial activity.
Forecasts
Economists predict a moderate recovery of the German economy in 2026 with GDP growth of around 1.0%. However, the successful implementation of these forecasts will depend on the new government’s ability to effectively address internal and external challenges.
Source: http://relocation.com.ua/ekonomika-nimechchyny-u-2025-rotsi-stahnatsiia-vyklyky-ta-nadii-na-vidnovlennia/
ECONOMY, GERMANY, RELOCATION
