Germany's economy stalled in the third quarter of 2025, with GDP showing no quarterly growth after seasonal and calendar adjustment. This flat performance follows a modest contraction in the previous quarter, suggesting the economy is struggling to gain momentum. The latest update reveals a mixed picture across key components of the economy. Gross fixed capital formation in machinery and equipment improved, indicating that some firms are still willing to invest despite higher borrowing costs and uncertain demand. However, exports declined, reflecting weaker external demand and lingering geopolitical trade pressures.

On an annual basis, GDP grew 0.3 percent, pointing to a fragile recovery when compared with the same period in 2024. The combination of stagnant quarterly growth and marginal annual expansion implies that domestic investment is cushioning the economy against deteriorating trade conditions. Overall, the figures signal a cautious outlook, with resilience in business investment counterbalanced by vulnerabilities in external sectors. This latest update leaves the RPI at 4 and the RPI-P at 12, meaning that economic activities, adjusted for prices, continue to outperform the expectations of the German economy.

The consensus sees GDP flat in Q3 from Q2 and up 0.3 percent on year.

Gross domestic product (GDP) is the broadest measure of aggregate economic activity and encompasses every sector of the economy. The provisional or flash estimate is normally released in the second week of the second month after the reference quarter. This is based on only limited data and provides just quarterly and annual growth rates and a limited qualitative guide to how the major output sectors performed.

GDP is the all-inclusive measure of economic activity. Investors need to closely track the economy because it usually dictates how investments will perform. Stock market Investors like to see healthy economic growth because robust business activity translates to higher corporate profits. The GDP report contains information which not only paints an image of the overall economy, but tells investors about important trends within the big picture. These data, which follow the international classification system (SNA93), are readily comparable to other industrialized countries. GDP components such as consumer spending, business and residential investment illuminate the economy's undercurrents, which can translate to investment opportunities and guidance in managing a portfolio.

Each financial market reacts differently to GDP data because of their focus. For example, equity market participants cheer healthy economic growth because it improves the corporate profit outlook while weak growth generally means anemic earnings. Equities generally drop on disappointing growth and climb on good growth prospects.

Bond or fixed income markets are contrarians. They prefer weak growth so that there is less of a chance of higher central bank interest rates and inflation. When GDP growth is poor or negative it indicates anaemic or negative economic activity. Bond prices will rise and interest rates will fall. When growth is positive and good, interest rates will be higher and bond prices lower. Currency traders prefer healthy growth and higher interest rates. Both lead to increased demand for a local currency. However, inflationary pressures put pressure on a currency regardless of growth.