German economy loses momentum in Q2

By Bahattin Gonultas

BERLIN (AA) - The German government has reported that the economy lost momentum in the second quarter following the upturn at the beginning of the year.

The German Federal Ministry for Economic Affairs and Climate Action has published its monthly report on the country's economy, noting that after the significant rise at the beginning of the year, economic growth in Germany showed a slightly weaker momentum in the second quarter.

The ministry said that although there has been a noticeable improvement in sentiment indicators related to business expectations in recent months, the latest economic data still signals for stagnant situation.

Despite brighter business expectations, the report states that industrial production and factory orders continue to fluctuate, and that foreign trade, particularly exports to the US, has had a dampening effect on growth due to a decline following first-quarter expectations.

The ministry's report noted that the domestic economy showed uneven growth, with ongoing geopolitical uncertainties and a weak labor market reducing consumer confidence.

The report stated that the economic recovery slowed in the second quarter, with one reason being the continued uncertainty surrounding the US tariff policy.

Meanwhile, although the German economy recorded stronger-than-expected growth of 0.4% in the first quarter of 2025, the tariff dispute between US President Donald Trump and the EU continues to cause uncertainty among companies and consumers.

Tariff wars and some of Trump's statements are fueling concerns about negative effects on global trade, while analysts view the US president's tariff policy as a special risk to Germany's economic growth.

The German economy, which is more dependent on the manufacturing sector than other countries in the region, remains fragile due to persistent weakness in production.

The economy contracted by 0.2% in 2024 compared to the previous year. Increased competition with China and structural problems slowed the economy, resulting in a second consecutive year of contraction.

The government had previously announced a growth forecast of 0.3% for this year, but following Trump's policies and the impact of global trade tensions, it lowered the forecast to zero on April 24.