German economy hits 0.4% growth but future still uncertain
The German economy recorded a GDP growth of 0.4% in the first quarter of 2025, yet future forecasts remain pessimistic. As experts point out, this is the longest period of stagnation since the Second World War. Describing the causes of this situation, they refer to the recently published book "Kaput: The End of the German Economic Miracle."
What do you need to know?
- In the first quarter of 2025, the German economy recorded a GDP growth of 0.4%, surpassing analysts' expectations.
- Meanwhile, the German Chamber of Industry and Commerce predicts that Germany's GDP will contract by 0.3% in 2025, marking the longest period without economic growth since the Second World War.
- Economists from Bank Pekao, describing the current situation, reference Wolfgang Münchau's book "Kaput: The End of the German Economic Miracle" and highlight the major errors made by German governments.
However, changes are happening in the west: the situation in Germany
The Polish Economic Institute notes that despite the GDP growth in the first quarter of 2025, the German economy continues to struggle with a lack of substantial signs of revival. Exports increased by about 3% quarter-on-quarter, largely due to demand for pharmaceuticals and cars. However, the overall business climate remains pessimistic.
The German Chamber of Industry and Commerce forecasts a 0.3% contraction in Germany's GDP in 2025, indicating the longest period without economic growth since the Second World War. Despite moments of optimism, long-term prospects remain uncertain.
Does the German economy have a chance for revival?
Economists from Bank Pekao refer to the recently published book by Wolfgang Münchau, "Kaput: The End of the German Economic Miracle."
Münchau identifies several reasons for the decline of Germany's economic power.
He notes that Germany has become economically reliant on cheap Russian gas and the Chinese market. Consequently, when gas prices rose and China advanced its industrial capabilities, Germany's development stalled. The author also highlights that Germany's industrial strength still depends on scientific and technical discoveries made as far back as the 19th century.
Münchau also comments that Germany neglected investments in public infrastructure, as such spending is more easily reduced than social expenditure. For instance, the internet network in Germany is still slow and unreliable because it relies on copper and coaxial cables instead of fibre optics.
Investments are expected to stimulate growth
Experts suggest that the key to improving Germany's economic situation is a stimulus programme through increased investments. This could lead to a positive GDP growth rate in the future.
Nevertheless, despite positive indications, the German economy remains stagnant. Germany continues to be a significant trade partner for Poland, making its economic condition important for Polish exporting companies as well.
