BERLIN, Jan. 15 (Xinhua) -- Germany's economy grew 0.2 percent in 2025 after inflation adjustment, preliminary data from the Federal Statistical Office (Destatis) showed on Thursday, ending two consecutive years of recession.
"The German economy edged back into growth," Destatis president Ruth Brand said at a press conference in Berlin, attributing the modest expansion mainly to stronger household and government consumption.
Government final consumption expenditure rose by 1.5 percent in 2025, while private consumption increased by 1.4 percent, Destatis said. Spending growth was particularly strong in healthcare, while outlays on mobility also picked up, partly driven by higher car purchases.
However, Carsten Brzeski, global head of macro at ING Research, said private consumption in Germany remained muted and that a significant pickup in the near term appeared unlikely. He pointed to a weakening labor market, a rising number of corporate insolvencies and persistent uncertainty over the future of the country's pension system.
Exports remained a major drag on Europe's largest economy in 2025. Destatis data showed German exports fell by 0.3 percent in 2025, marking a third consecutive annual decline, amid falling shipments of cars, machinery and chemical products. Brand cited strong headwinds for exporters, including U.S. tariffs and a stronger euro.
Earlier figures from the German Economic Institute showed German exports to the United States fell 7.8 percent year-on-year in the first three quarters of 2025, with shipments of cars and auto parts down 13.9 percent and exports of machinery and chemical products each declining by around 10 percent.
The institute estimated the drop in exports to the United States alone shaved about 0.81 percentage points off Germany's overall export growth during the period.
On the domestic front, fiscal measures provided some support, but had limited impact on business confidence. The federal government relaxed debt brake constraints on defense spending in early 2025 and set up an infrastructure fund worth 500 billion euros (580 billion U.S. dollars) to boost public investment. Still, overall investment fell by 0.5 percent last year, Destatis said, despite an increase in government investment, as a 2.3 percent drop in business investment in machinery and equipment more than offset the gains.
Analysts say deep-rooted structural hurdles in industry continue to weigh on growth potential. Gross value added in manufacturing fell by 1.3 percent in 2025, marking a third straight year of decline.
"With this meagre increase, GDP is merely back at the level of 2019," said Nils Jannsen, head of German economic forecast at the Kiel Institute for the World Economy. "A phase of six years without rising GDP is unprecedented in the history of the country," he added.
Jannsen said Germany's economy could grow by around 1 percent in 2026 as expansionary fiscal policy delivers a boost, but warned that such measures would only mask underlying weakness for a limited period and do little to lift long-term growth potential.
Brzeski said that a sustainable recovery would hinge on whether the government manages to implement key structural reforms this year. (1 euro = 1.16 U.S. dollar) ■