Large-Scale Investment Plans Announced
Economic Stimulus Effects Expected Next Year
Germany's gross domestic product (GDP) for the second quarter decreased by 0.3% compared to the previous quarter, according to data compiled by the Federal Statistical Office on August 22 (local time). This figure was revised downward by 0.2 percentage points from the preliminary estimate of -0.1%.
Germany's economic growth rate turned negative for the first time in four quarters, since the second quarter of last year (-0.3%). In the first quarter of this year, growth reached 0.3% due to strong exports before the implementation of U.S. tariffs.
The Statistical Office noted that industrial production was particularly weaker than expected. While private and public spending increased by 0.3% compared to the previous quarter, investment in equipment such as machinery fell by 1.9%, and goods exports declined by 0.6%. Germany's second-quarter economic growth rate was lower than the European Union (EU) average of 0.2%, as well as other major countries such as Spain (0.7%), France (0.3%), and Italy (-0.1%).
Germany recorded negative growth rates in both 2023 and last year, raising concerns about the possibility of its first-ever three consecutive years of economic contraction this year. The Bundesbank (Germany's central bank) projected this year's economic growth rate at 0.0%.
At the beginning of this year, the German government effectively lifted the debt limit for infrastructure and defense sectors and announced large-scale investment plans. However, experts believe that the economic stimulus effects will not be seen until next year.
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