The German economy dropped by 0.3% in the second quarter of 2025, according to official data released on Friday. This was worse than the first estimate of 0.1% and showed that Europe’s largest economy faced serious problems. The fall followed a 0.3% growth in the first quarter but was slowed by weak results in manufacturing and construction. Household spending was also reduced, adding more pressure on the economy. Economists said the decline was a crucial test of stability, as new tariffs from the United States and fewer gains from exports caused damage. The government under Chancellor Friedrich Merz, who took office on May 6, 2025, called economic recovery a main goal.

The administration announced a €500 billion ($582 billion) program to improve infrastructure, speed up digitization, and cut delays. Companies pledged €631 billion ($731.7 billion) in three years. Experts said strategic and considerable efforts were needed, as progress may be persistent and slow, though some remained optimistic.