Germany’s economy seems to have opted for a path of steady, gradual progress. The government cheerfully reports that 2025 will bring a modest 0.2% growth, while in 2026, thanks to bags of fiscal stimulus and perhaps a few well-timed jokes from the finance minister at dinner, the country should spring ahead by 1.3%. Such progress may attract only faint praise, yet it still marks an improvement over continued stagnation.
But celebration may be premature, as the country’s industrial sector is once again disappointing fans of German stability. In August, industrial production took a steep dive, down 4.3% in just one month. The auto industry saw even more dramatic losses, plunging by 18.5%. The data is causing panic among economists, and BMW, facing Chinese market woes and new US tariffs, has quietly lowered its profit forecast.
The official explanation is that factories close for holidays in August and adjust their setups, but the reality points to tariffs, Chinese competition, and surging energy costs. Germany’s economic crisis has persisted for two years now, and Chancellor Friedrich Merz is promising a revival, a solution to workforce aging, and a battle against bureaucracy. So far, progress has been underwhelming—there is some hope, but little in terms of concrete results.
For now, the government’s latest forecast is expected to inch up slightly, offering the world a 0.2% increase, provided, of course, that the statistics do not spring any surprises.
