With a gross domestic product of €4,470 billion in 2025, Germany remains the world's third-largest economy after the United States and China and just ahead of Japan, making it the largest economy in Europe. However, India is expected to overtake Japan and Germany in the future. Exports of motor vehicles and motor vehicle parts as well as chemical products in particular have made Germany the world's third-largest export nation. At 70%, the service sector contributes the largest share to the country's gross domestic product (GDP).
Data retrieved: 10 March 2026
Current insights in March 2026
- Economic growth
- Export
- Inflation
- Unemployment
- Vegetable harvest
Cautious recovery meets geopolitical uncertainties
A noticeable economic upturn in Germany is still a long time coming. In its January 2026 forecast, the German government expects only slight economic growth of +1.0% this year. In fall 2025, gross domestic product was still expected to grow by +1.3%.
The consequences of the Iran war also threaten the German economy. Rising oil prices could significantly slow German economic growth. According to a simulation by the IW Cologne, German gross domestic product (GDP) would be 0.5% lower in 2026 and 1.3% lower in 2027 if the oil price were to reach US$150 per barrel. This corresponds to a loss of more than €80 billion over the two years. Even a smaller increase in the oil price would have noticeable consequences: if it climbs to US$100, GDP losses would amount to -0.3% in 2026 and -0.6% in 2027 – an economic loss of around €40 billion over the two years.
By contrast, sentiment among companies in Germany has improved recently. The ifo Business Climate Index rose to 88.6 points in February 2026, up from 87.6 in January. Companies were more satisfied with their current business and expectations also brightened.
The public expenditure ratio, which indicates the state's influence on an economy, is calculated as total government expenditure as a percentage of GDP. According to the EU Commission, this amounted to 50.2% in Germany in 2025, representing a further increase of +0.7 percentage points compared to 2024. This put the public spending ratio slightly above the EU average of 49.6%, but significantly above the public spending ratios of other major economies such as the United Kingdom (46.9%), Japan (41.3%), and the United States (39.6%).
According to the OECD, the share of taxes and social security contributions in total labor costs for average earners in Germany was 47.9% in 2024 for singles without children. This puts Germany in second-worst place among the 38 OECD member states after Belgium and well above the OECD average of 34.9%, which detracts from Germany's attractiveness as an investment location. The ratio is also significantly lower in countries outside the EU, such as the United Kingdom (29.4%) and the United States (30.1%).
The current forecasts by German economic research institutes and government organizations for GDP growth in Germany range between +0.6% and +1.5% for the 2026 calendar year and between +1.0% and +1.6% for 2027:
Data retrieved: 10 March 2026
German exports down at the start of the year
German exporters got off to a slow start in 2026. In January 2026, goods worth €130.5 billion were sold worldwide – a decline of 2.3% compared to the strong previous month of December 2025. This is the sharpest decline since May 2024. Compared to the same month last year, January 2025, they rose slightly by +0.6%.
Conversely, goods worth €109.2 billion were imported – a decrease of -5.9% compared to the previous month of December 2025. The foreign trade balance thus closed with a surplus of €21.3 billion.
Most German exports in January 2026 were again destined for the United States. After adjustment for calendar and seasonal effects, goods worth €13.2 billion were exported there, which was +11.7% more than in December 2025. Exports to the People's Republic of China fell by 13.2% to €6.3 billion in January 2026 compared with December 2025. However, US tariffs continue to weigh on exports and, according to economists' estimates, are not expected to take full effect until some time in 2026.
Most imports in January 2026 came from the People's Republic of China. Goods worth €14.2 billion were imported from there, adjusted for calendar and seasonal effects. This was -8.3% less than in the previous month.
Real (price-adjusted) order intake in the manufacturing sector fell by 11.1% in January 2026 compared with December 2025, adjusted for seasonal and calendar effects. Excluding large orders, order intake was 0.4% lower than in the previous month. In the less volatile three-month comparison, orders received from November 2025 to January 2026 were +7.4% higher than in the previous three months.
Real (price-adjusted) production in the manufacturing sector fell by 0.5% in January 2026 compared with December 2025, after seasonal and calendar adjustment. In the less volatile three-month comparison, production from November 2025 to January 2026 was 0.9% higher than in the previous three months.
Inflation falls below two percent in February 2026
Price pressure in Germany has eased somewhat. In February 2026, consumer prices were only 1.9% higher on average than in the same month of the previous year. In January 2026, the inflation rate was still 2.1%.
Once again, services were the main drivers of inflation, rising by 3.2%. By contrast, consumers paid 1.9% less for energy than a year earlier. Food prices rose by 1.1%. The inflation rate excluding food and energy, known as core inflation, remained at 2.5%.
Many people also have more money in their pockets thanks to rising wages: last year, in 2025, incomes rose again faster than inflation. According to the Federal Statistical Office, real wages climbed by +1.9% overall. This means that real wage levels have almost returned to those seen in 2019, the year before the pandemic.
For 2026, economic research institutes are forecasting an average inflation rate of 1.8% to 2.2%.
Data retrieved: 10 March 2026
Unemployment figures remain above the three million mark
More than three million people in Germany are still unemployed. Even though the figure fell by 15,000 in February 2026 compared to the previous month, it remains above the three million mark at 3.07 million.
In terms of the unemployment rate, this means that it fell by 0.1 points to 6.5% in February 2026 compared to January. Compared to the same month last year, it is currently 0.1 points higher.
The challenging economic environment continues to prevent a recovery in the labor market. Demand for labor among companies remained virtually unchanged at the end of the winter break. The number of job vacancies reported to the Federal Employment Agency fell by only 1,000 to 638,000 compared to the previous year.
Vegetable harvest in Germany reaches new high in 2025
Germany's farmers harvested more vegetables last year than ever before. According to the Federal Statistical Office (Destatis), the harvest amounted to 4.5 million tons. This represents an increase of +8.1% compared to 2024 and even exceeded the average for the years 2019 to 2024 by +13.2%. This is the highest level since the time series began in 1990.
The area under cultivation was also expanded: a total of 5,960 vegetable farms cultivated around 131,700 hectares – 3.9% more than in the previous year. Outdoor cultivation increased by +3.9% to around 130,400 hectares in 2025. The largest areas were in North Rhine-Westphalia, followed by Lower Saxony, Bavaria, and Rhineland-Palatinate.
For the first time since 1990, onions were the most harvested vegetable in Germany, with 903,300 tons. Compared to 2024, this represents an increase of +21.4%. Carrots followed in second place with 865,700 tons, followed by white cabbage with 507,500 tons.
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