German economy stagnates in third quarter amid weak exports and falling consumption

Germany’s economy is suffering from weak exports: gross domestic product stagnated in the third quarter, and a trend reversal is unlikely.

Europe’s largest economy did not grow again in the third quarter due to falling consumer spending and declining exports.

The Federal Statistical Office confirmed on Tuesday that gross domestic product stagnated from July 2025 to September 2025 compared to the previous quarter.

After recording a 0.3% increase in the first three months, the economy had shrunk by 0.2% in the spring.

“Economic growth slowed in the third quarter due to weak exports, while investments showed a slight increase,” said Ruth Brand, President of the Federal Statistical Office.

Investment in equipment—specifically machinery, devices, and vehicles—increased by 1.1% compared to the previous quarter. “This is also reflected in a positive development in new registrations of commercial vehicles,” the statement said.

In contrast, construction investment decreased by 0.5%. Private consumption contracted by 0.3%, the first time since the fourth quarter of 2023.

“One of the reasons for this was that households spent less on food, beverages, and accommodation services,” the statisticians said.

No positive momentum came from foreign trade either: exports of goods and services fell by 0.7% compared to the second quarter. In particular, exports of services—such as fees for the use of intellectual property, like license fees for software distribution or franchise fees—decreased significantly.

Despite high US tariffs, goods exports fell by only 0.1%. Imports of goods and services stagnated at the level of the previous quarter. In contrast, government consumption increased by 0.8%.

Christian Breuer, an economist at the Institute for Macroeconomics and Business Cycle Research (IMK), told Handelsblatt, “The continued weakness of the German economy shows that the crisis is not over yet. The decline in exports to the US and China presents the German economy with significant challenges.”

Thus, the People’s Republic of China has increasingly started to produce goods it formerly imported from Germany itself. Furthermore, trade with the US is performing poorly because President Donald Trump has imposed high tariffs on goods imported from the European Union.

Since August, a 15% tariff has been applied to the vast majority of EU exports to the US, which is several times the previous value.

A recovery in the fourth quarter is also unlikely. The Ifo Business Climate Index, the most important leading indicator for the German economy, surprisingly fell from 88.4 points in October to 88.1 points in November.

Ifo expert Klaus Wohlrabe said this points to a mini-growth of 0.1% in the fourth quarter. “The dynamism is missing; the economy is stagnating,” he said.

The main problem remains a lack of orders. “Germany used to be able to export its way out of crises. That is no longer possible,” said Wohlrabe. Companies’ export expectations have fallen, and international competitiveness is at risk.

The Bundesbank also predicts that Germany will only record slight growth at the end of the year. The current monthly report states that due to its poor competitive position, domestic industry is “only benefiting to a limited extent from the continuously moderately growing world economy.”

In their report for the federal government, economic experts expect growth of only 0.2% at the end of the year.

For 2026, however, growth of 0.9% is expected, thanks in particular to the federal government’s multi-billion euro investments in infrastructure and defense.