The German economy in recessionary rhythm

In the second quarter of 2025, the German economy recorded a decline in GDP by 0.3 percent q/q. This result turned out to be worse than the initial estimates (-0.1 percent) and reversed the 0.3 percent increase recorded in the first quarter. At the same time, Polish exports to Germany recorded a clear increase.

Factors weakening the German economy

The most important source of deterioration turned out to be investments. Fixed capital expenditure decreased by 1.4 percent. compared to an increase of 0.3 percent in the first quarter of 2025. The decreases concerned both construction and purchases of machinery, equipment and vehicles, which indicates a deterioration of the investment climate in Germany.

Foreign trade also had a negative impact on growth. Exports decreased by 0.1 percent., partly under the influence of rising tariffs from the US, while imports increased by 1.6 percent., deepening the imbalance in the trade balance.

The dynamics of domestic consumption also deteriorated, increasing by only 0.1 percent. compared to 0.6 percent in the first quarter. Government spending, on the other hand, increased by 0.8 percent. After an earlier decline of 0.3 percent.

Sectorally, declines were recorded in industry, construction, trade, transport, hospitality, and the financial and insurance sectors.

On an annual basis, the German economy grew by 0.2 percent., compared to 0.3 percent in the first quarter.

Polish exports to Germany in 2025

In the first half of 2025, trade between Poland and Germany reached a record value of EUR 90 billion, EUR 4.6 billion more than a year earlier (+5.4 percent).). In May 2025, the value of exports from Poland to Germany amounted to approx. EUR 6.675 billion (+9.2% y/y). In July – EUR 6.79 billion (+6.5% y/y).

German exports in 2025

Poland is currently in fifth place among Germany’s most important trading partners, after France, the USA, China and the Netherlands.

In the first half of 2025, Germany’s exports to Poland increased by more than EUR 2.6 billion (+5.7% y/y), reaching EUR 49.4 billion. Poland is becoming an increasingly important market for German industry and technology.

The upward trend in German exports is also visible in relations with other countries in the region,  trade with Ukraine is developing particularly dynamically (+30% y/y, to EUR 4.6 billion). Moderate growth was also recorded in the Czech Republic (+3.4% y/y, to EUR 57.8 billion).

Not all markets are maintaining positive dynamics – exports to Hungary fell by 3.7 percent., and the largest regression occurred in trade with Russia (-13% and/and).

Thus, the turn of German exports from traditional directions – such as Russia – to the stable and developing markets of Central and Eastern Europe, including Poland, is becoming more and more visible.

Sources:

• Polish Press Agency (PAP), „Rekordowy handel między Polską a Niemcami”
  Federal Statistical Office of Germany

Translated by IDC

JL