The German Economy Grows Due to Investments in Infrastructure and the Defense Industry

Business
BB.LV
Publiation data: 24.01.2026 13:41
The German Economy Grows Due to Investments in Infrastructure and the Defense Industry

By 2030, it is expected that 270,000,000,000 euros will be invested in transport and communication.

The largest economy in Europe has returned to moderate growth: increased consumer and government spending offset the decline in export volumes.

After two years of production decline, the German economy returned to moderate growth, according to data from the Federal Statistical Office for the past year.

The growth of gross domestic product by 0.2% in 2025 was driven by increased consumer and government spending. Meanwhile, exports fell under the weight of the tightening trade policy of the United States under President Donald Trump.

This was preceded by contractions of 0.5% in 2024 and 0.9% in 2023.

"Germany's export sector was under significant pressure due to rising American tariffs, the strengthening euro, and increased competition from China," explained the head of the office, Ruth Brand. Expectations that the country will finally show confident growth this year have strengthened as the government under Chancellor Friedrich Merz has begun to implement plans to increase infrastructure spending to compensate for years of underinvestment.

Meanwhile, Berlin's defense spending is rising amid growing concerns about "possible military aggression from Russia."

Rising energy prices since the start of the war in Ukraine and increased competition from China in key sectors for Germany, such as automotive and industrial equipment manufacturing, have restrained the economy, which is largely export-oriented.

Slow growth has revealed long-term structural problems, such as excessive bureaucracy and a shortage of skilled labor.

The strengthening euro has also reduced the price competitiveness of exports.

A group of leading economists predicts that the German economy will grow by 0.9% this year but warns that this forecast may be at risk if the increase in government spending occurs more slowly than expected.

<iframe width="560" height="315" src="https://www.youtube.com/embed/5g1zRjsFwZQ?si=V5ZY5OrLSpMlQSpB" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>

ALSO IN CATEGORY

READ ALSO