Germany's economy has shrunk by 0.3%, which is significantly worse than initially reported. To find this data, they compared their results with the previous 3 month period. The Federal Statistical Office said that the GDP contracted by 0.1% in April to June, and found this data by comparing it with the 1st quarter for Europe's biggest economy (2025).
The data also showed that the manufacturing and construction industry had also worsen, and the household spending was revised down in the quarter. These results were shown after a 0.3% growth (2025).
Since the German economy has been shrinking for the past two year, it's been Chancellor Friedrich Merz's top priority since taking office and has launched a program to encourage investing. He plans to set up a $582 billion-euro fund to pour money back into Germany's infrastructures over the next 12 years. Companies have pledged to invest at least 631 billion-euros in Germany over the next three years (2025).
Economist Carsten Brzeski stated that the surge in economic activity is the result from the U.S. front-loading of German exports in the first quarter, while the economy experienced a reversal of this front-loading effect. The U.S. tariffs took effect second quarter and this was the first full-blown impact of the tariffs (2025).
I need to further my research on the tariffs that are being placed, but it seems like the U.S. is doing a lot of harm on other countries economies. I think the U.S. should become more aware of how these policies are effecting other countries as well as how they are effecting the U.S.
I am also curious about how many companies are contributing to the 631 billion-euro investment in the next three years. Will small businesses be apart of this later on?
German Economy Shrank by 0.3% in Second Quarter in Worse Showing than Initially Thought, AP News. (2025, August 22). AP News. https://apnews.com/article/germany-economy-gdp-shrank-second-quarter-ed5a0ca6732d3cf92828e045144defc2
Do you think the U.S is aware of the effects of its tariff policies on other countries and simply do not care?
ReplyDeleteIt’s surprising how much U.S. tariffs are dragging down Germany’s economy after such a strong first quarter. The huge investment fund sounds promising, but I wonder if pouring so much money into infrastructure will be enough to turn things around long term. It feels like Germany might need deeper reforms to really boost growth.
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