Germany’s economy showed a strong start to the fourth quarter

At the same time, business indicators show an ambiguous picture at the end of the year

The German economy had a strong start to the fourth quarter of 2025. This is stated in the monthly report of the country’s Ministry of Economy.

As noted, current indicators point to a confident start to the period. The recovery in production growth and a noticeable increase in domestic orders in the industrial sector in October indicate stabilization. Thanks to more dynamic demand from the EU, exports of goods also remained at a six-month high.

However, as noted by the ministry, sentiment and leading indicators paint a mixed picture for the coming months. In particular, there has been a slight recent deterioration in business expectations and consumer sentiment.

“As the end of the year approaches, the German economy remains caught between a difficult external economic environment on the one hand and gradual internal stabilization on the other,” the ministry said in a report.

In the industrial sector, production in October 2025 remained roughly at the previous year’s level (-0.1%). Despite weak foreign orders and a shortage of intermediate goods from abroad, the industrial economy is expected to stabilize, given the recent significant growth in domestic demand for means of production.

The inflation rate in November remained at 2.3% year-on-year, matching October’s figure.

Current data for the beginning of the last quarter, according to the agency, indicate only stabilization, but not a full recovery of the export sector. Based on current forecasts, the negative impact of tariff increases is likely to remain clearly visible at the turn of 2025 and 2026. This means that the sales outlook for German exporters remains challenging for the coming months.

According to the Bundesbank’s November forecast, the German economy is likely to show moderate growth in the fourth quarter of this year. Although the German economy will only benefit marginally from continued moderate global growth due to its weak competitive position, exports and industry are likely to stabilize in October-December. The central bank also expects positive momentum from the services sector.