Link Securities | According to the final reading of the data released by the German Federal Statistical Office, Destatis, Germany’s gross domestic product (GDP) contracted by 0.3% in 2Q25 compared to the previous quarter, more than the 0.1% contraction initially estimated, which was in line with the consensus of FactSet analysts. In 1Q25, Germany’s GDP had grown by 0.3% in quarterly terms. The decline in 2Q25 is the sharpest quarterly drop since 2Q24.
In 2Q25, fixed capital investment fell by 1.4% (up 0.3% in 1Q25), reflecting lower investment in both construction and equipment, mainly machinery, equipment and vehicles. Net trade also weighed on growth, as exports fell by 0.1% (up 2.5% in 1Q25), affected by the increase in US tariffs, while imports continued to rise (up 1.6% versus 1.6% in 1Q25). At the same time, private consumption growth slowed sharply (up 0.1% versus 0.6% in 1Q25), while public spending rebounded (up 0.8% versus a drop of 0.3% in 1Q25). Meanwhile, inventory variation contributed positively to GDP growth in the quarter.
By sector of activity, it is worth noting that production contracted in manufacturing, construction, trade, transport, hospitality, and financial and insurance services.
In year-on-year terms, Germany’s GDP grew by 0.2% in 2Q25 (up 0.3% in 1Q25), also below the initial estimate of 0.4%, which was in line with consensus expectations. However, year-on-year GDP growth in the quarter was the second consecutive quarter of growth.