Germany’s economy showed no growth in the third quarter, as reported on Thursday, reflecting challenges in boosting economic activity due to decreasing exports. This stagnation follows a 0.3% contraction in the previous quarter, driven by weak global demand and U. S. tariffs impacting exports. However, the economy avoided recession thanks to increased corporate investment in equipment.
The economy ministry recently raised its growth estimate for the year to 0.2% and projected growth of 1.3% in 2026 and 1.4% in 2027. Optimism for growth stems from Chancellor Friedrich Merz’s promise of increased spending on infrastructure and defense, though benefits from these measures are taking longer to materialize. Experts expressed concerns that the government’s fiscal plan may not sufficiently revive the economy without necessary reforms.
Unemployment remains high, hitting 3.02 million in August, although it slightly decreased in October. The jobless rate stayed constant at 6.3%. Consumer sentiment is low due to inflation and job security fears, with a GfK indicator dropping to -24.1 for November. High costs and bureaucracy are also seen as obstacles to recovery. Despite slight easing in inflation to 2.3% year on year, spending power continues to be affected.
With information from Reuters