Something dangerous is happening. A turnaround in Germany

• The German economy stalled in the second quarter, despite a good performance at the beginning of the year.
• The government announces investments to revive the economy in the second half of the year.
• However, their effects will depend on the speed of implementation and the international situation.

Our neighboring economies have stalled again , with year-on-year growth at zero. Furthermore, the Federal Statistical Office of Germany (Destatis) announced that in the second quarter of 2025, German GDP decreased by 0.1% compared to the first quarter.

After a rebound at the start of the year, production has slowed and the trend for the rest of 2025 remains "generally weak."

This is a big disappointment , as in the first quarter , Germany's GDP grew by 0.4% , the most in over two years, and the new government in February announced a partial departure from the previous austerity policy and new, large state investments in defense and infrastructure.

According to the Bundesbank, the impulses that enabled growth in the first quarter have already faded, and there are no new ones related to the government's plans. Meanwhile, the high optimism of German companies has not yet translated into tangible economic results, as it is based primarily on expectations rather than an assessment of the current situation.

German Finance Minister Lars Klingbeil argues that the government packages already approved and planned investment expenditure will contribute to economic growth in the second half of the year.

The final impact of these actions on GDP growth will, however, depend on the pace of implementation of the packages, which may be slow, and the international situation related mainly to US tariffs.