FX.co ★ Germany’s Economy Gains Momentum in Q4

Germany’s economy grew by 0.3% in the fourth quarter of 2025, confirming preliminary estimates and marking a clear rebound from the stagnation seen in the previous quarter. This was the strongest quarterly expansion since the first quarter of 2025, underpinned by easing inflation and lower borrowing costs, which helped strengthen domestic demand.

Household consumption increased by 0.5%, after showing no growth in Q3, while government spending rose by 1.1%, up from 0.6% in the previous quarter. Construction investment also recovered notably, expanding by 1.6% following a 0.7% decline in Q3.

These gains were partially offset by a negative contribution from inventories, which subtracted 0.3 percentage points from GDP, and from net external demand, which reduced growth by 0.1 percentage points, in part due to the impact of US tariffs.

On an annual basis, the economy expanded by 0.4% in Q4, up from 0.3% in Q3. For the full year 2025, GDP increased by 0.2%, representing a modest recovery after a 0.5% contraction in 2024.