GERMAN DATA: Another Year Of Sluggish Growth In 2025, Recovery Seen In 2026

German GDP was estimated to have grown 0.2% in 2025, in line with Bloomberg consensus. It points to another sluggish year for Europe’s largest economy. However, the highly anticipated expansion of fiscal policy is expected to drive a more meaningful recovery in 2026. Consensus currently sees 2026 GDP growth at 1.0%, above the Bundesbank’s 0.6% projection but below the EC’s 1.2% forecast.

• Destatis notes that “After two years of recession, the German economy edged back into growth. The growth is primarily attributable to increased household final consumption expenditure and government final consumption expenditure"
• "On the other hand, exports recorded another decline. Germany's export business faced strong headwinds owing to higher US tariffs, the appreciation of the euro and increased competition from China. In addition, investment remained weak, with fixed capital formation in machinery and equipment and in construction down on the previous year"
• Destatis estimates (based on incomplete data) that GDP rose 0.2% Q/Q in Q4 – in line with forecasts submitted to Bloomberg’s ECFC page. Meanwhile Q1 2025 GDP was revised up 0.1pp to 0.4%.
• On the fiscal side, the German deficit was 2.4% GDP, below Bloomberg consensus of 2.7%. The bulk of upcoming fiscal loosening is expected to take place in 2026.