Global economy with moderate growth
Following a weak economic year in 2024, the global economy expanded moderately in 2025. The United States once again recorded strong growth, driven by robust domestic demand and high levels of government spending. In other major economies, particularly China, increases in production remained limited and expansion was subdued. Globally, growth in 2025 was once again largely driven by the services sector, while global industrial production and international trade in goods lost momentum, especially in the second half of the year.
In the eurozone, economic activity and growth remained at a low level. The slight increase in gross domestic product (GDP) was primarily attributable to one-off effects and government stimulus. At the same time, US tariffs in particular created headwinds for trade. Industrial production and business sentiment in the eurozone at the end of 2025 underscored the continued subdued development.
Moderate increase in German GDP in the 2025 financial year
Year-on-year change in real GDP
The German economy also stabilized only slightly in 2025 following two years of declining economic output. Overall, Germany’s GDP increased modestly in the 2025 reporting year, rising by 0.2%. This was primarily due to a moderate recovery in private consumption, while overall economic momentum remained weak.
German industry remained under great pressure to adapt to changing structural conditions. Despite slight stabilization, foreign demand remained very subdued at the end of the year and the business climate determined by the ifo Institute deteriorated once again.
Persistently high financing costs weighed noticeably on investing activities. In addition, heightened economic policy uncertainty – due in part to tariffs imposed by the US administration – and continued underutilized capacity dampened corporate investment. The competitiveness of German industry remained constrained, and increasing competitive pressure, particularly from China, was reflected in weak exports.
Sources for this section:
Deutsche Bundesbank, monthly report, January and February 2026
IfW Kiel, Kiel Institute Economic Outlook, No. 128 (2025|Q4)
IMK, IMK report no. 198, December 2025