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• Along with a slight upward revision of GDP figures for the second quarter, the Federal Statistical Office reports stagnation in GDP for the third quarter, according to its preliminary report. Positive impetus came from the domestic economy, particularly investment in equipment (machinery, plant, and motor vehicles). Declining exports due to increased trade barriers likely dampened GDP growth. On the production side, the service sector likely provided slight support for growth once again, while value added in industry and construction is expected to have continued its downward trend. Current leading indicators paint a mixed picture, influenced not only by geopolitical tensions but also by uncertainties in the supply of key intermediate goods.
• In September, production in the manufacturing sector rose by 1.3 percent compared to the previous month, adjusted for price, calendar, and seasonal effects; in August, it had fallen by 3.7 percent, primarily due to a special situation in the automotive industry (factory holidays, production changeovers). Industrial production rose by 1.9 percent compared to the previous month, with capital goods production in particular expanding strongly by 3.8 percent. Energy production also developed positively, increasing by 1.3 percent, while construction declined by 0.9 percent. In the third quarter, production in the manufacturing sector was 0.8 percent lower than in the previous quarter.
• Price-adjusted retail sales (seasonally adjusted, excluding motor vehicles) stagnated in September compared to the previous month. Compared to the same month last year, retail sales in September increased by 0.2 percent, with food sales rising by 0.3 percent, while sales of non-food items declined by 0.8 percent. New car registrations by private individuals showed an increase of 2.7 percent in October compared to the previous month and a rise of 9.2 percent over the past three months. Compared to the same month last year, new car registrations by private individuals were up 12.0 percent, significantly higher than the previous year. Current sentiment suggests that consumer spending will remain rather subdued as the year draws to a close.
• The inflation rate fell slightly to 2.3 percent in October. Services remain the main driver; the core inflation rate, at 2.8 percent, remains elevated, as it was in the previous month. Energy prices continue to have a dampening effect, falling 0.9 percent year-on-year in October. Inflation is expected to remain stable at just over 2 percent until the end of the year.
• The number of unemployed remained virtually unchanged in October, with a seasonally adjusted decrease of one thousand. Employment declined again in September, falling by 20,000 people, and employment subject to social security contributions also declined in August, by 17,000 people. Given the stagnation of GDP in the third quarter, the labour market situation is unlikely to improve much in the near future.

• Current economic indicators do not yet point to an economic recovery in the third quarter. In particular, the less favorable external economic conditions – a slowdown in global momentum, also due to the increasingly noticeable increase in US tariffs – are dampening German exports, especially to the US. Industrial production is being impacted by declining foreign orders. Domestic sectors, however, are showing signs of stabilization, particularly in the construction industry and in consumer and business-related services. Overall, however, economic momentum in Germany remains weak at the beginning of the second half of the year.
• The manufacturing sector significantly reduced its production volume in August, adjusted for price, calendar, and seasonal effects – by 4.3 percent compared to the previous month. In particular, industry saw a 5.6 percent decline. The slump in the automotive and automotive parts sector (also due to the factory holidays) was particularly noticeable at -18.5 percent. However, production declined across the board across all industrial sectors. Energy output decreased by 0.5 percent, continuing its downward trend that began in June. In contrast, the construction sector recorded its third consecutive increase, rising by 0.6 percent.
• Price-adjusted retail sales (seasonally adjusted, excluding motor vehicles) fell again in August by 0.5 percent compared to July, following an upward revision in the previous month. Compared to the same month last year, retail sales increased by 1.5 percent, with food sales declining by 0.9 percent and non-food sales increasing by 3.1 percent. New car registrations by private individuals increased by 5.0 percent in September compared to the previous month; the three-month period even showed an increase of 11.8 percent. Overall, sentiment currently points to a rather subdued consumption trend in the second half of 2025.
• The inflation rate rose slightly to 2.4 percent in September. Services remain the main driver; the core inflation rate remains elevated at 2.8 percent. Energy prices, however, continue to have a dampening effect, falling 0.7 percent year-on-year in September. Inflation is expected to remain stable at just over 2 percent until the end of the year.
• The number of unemployed increased by 14,000 people in September, seasonally adjusted. Employment declined slightly by 8,000 people in August, while employment subject to social insurance contributions recorded another slight increase of 8,000 people in July. Given the recent weak economic development and the rather mixed picture of leading indicators, the chances of a noticeable autumn recovery in the labor market remain modest.
• According to official statistics, the number of corporate insolvencies rose by 12.3 percent in July compared to June, to 2,197 filings; compared to the same month last year, it was 13.4 percent higher. The IWH insolvency trend for partnerships and corporations shows an increase of 5.1 percent for September compared to the previous month.

• The decline in gross domestic product (GDP) in the second quarter was more severe than initially expected. This was primarily due to special effects related to the advancement of exports to the USA in the first quarter, which led to a "rebound" in the following quarter. Domestic demand also weakened noticeably in the second quarter. Current sentiment indicators in the corporate sector, such as incoming orders, show signs of an economic recovery; however, consumer confidence among private households has recently weakened somewhat. Overall, the economic recovery is likely to remain subdued in the third quarter until the stimulus from the federal government's economic and fiscal policy measures takes a stronger impact later in the year.
• Production in the manufacturing sector increased by 1.3% in July, adjusted for price, calendar, and seasonal effects, driven primarily by mechanical engineering (+9.5%), the automotive industry (+2.3%), and the pharmaceutical sector (+8.4%). The construction sector grew slightly (+0.3%), while energy production fell significantly (-4.5%). The upward revision of the June data indicates overall stagnation in the three-month comparison, with motor vehicle production increasing (+4.2%) while other industrial sectors recorded losses. Overall, there are signs of stabilization in industrial production, driven by key sectors, while uncertainties and geopolitical risks persist.
• Price-adjusted retail sales (seasonally adjusted, excluding motor vehicles) fell by 1.5% month-on-month in July. Compared to the same month last year, retail reported a real increase of 1.8% in July, primarily due to a significant year-on-year increase of 14.0% in online and mail-order sales. New car registrations by private individuals fell by 2.0% in August compared to the previous month; however, the three-month comparison shows an increase of 8.5%. Current sentiment continues to show no signs of a reversal in subdued consumer sentiment. Consumers are cautious in light of the strained labor market situation and geopolitical uncertainties.
• The inflation rate rose slightly to 2.2% in August. Services remain the main driver, although their price momentum is slowing noticeably. Core inflation has remained stable at around 2.7% since the beginning of the year. Energy prices, which were 2.4% lower in August compared to the previous year, continue to have a dampening effect. Inflation is expected to stabilize at around 2% for the remainder of the year.
• Unemployment exceeded three million due to the usual increase in August. However, seasonally adjusted unemployment figures have recently stabilized. However, given persistently weak labor demand and continued subdued employment prospects in many sectors, a noticeable recovery in the labor market is likely to be some time yet.
• According to official statistics, the number of corporate insolvencies rose by 12.2% in the first half of 2025 compared to the first half of 2024. While corporate insolvencies fell by 3.9% month-on-month to 1,957 cases in June, 18.4% more insolvencies were recorded compared to June 2024. The IWH insolvency trend for partnerships and corporations shows a decline of 11.3% month-on-month for August.

• As expected, economic development weakened in the second quarter. According to a flash report from the Federal Statistical Office, gross domestic product (GDP) fell by 0.1% compared to the previous quarter, adjusted for price, calendar, and seasonal effects. The decline in GDP was likely primarily due to exports being brought forward in the first quarter, which led to a rebound in exports in the second quarter, particularly to the US. Consumption, however, developed positively, while investment declined. Despite the weak overall economy, business sentiment has noticeably improved in recent months. However, despite the agreement in principle in the tariff dispute between the EU and the US and the recent improvement in business sentiment, a tangible economic recovery is still pending.
• Production in the manufacturing sector fell by 1.9% in June compared to the previous month, adjusted for price, calendar, and seasonal effects. While industrial production declined significantly by 2.8%, construction output increased slightly (+0.7%), and energy production rose sharply by 3.1%. At the same time, order volume in the manufacturing sector declined by 1.0%. Although companies' export expectations brightened somewhat in July, given the now likely permanent increase in tariffs on exports to the US, industrial activity is likely to be initially characterized by subdued foreign demand.
• Price-adjusted retail sales (seasonally adjusted, excluding motor vehicles) rose by 0.9% in June compared to the previous month. Compared to the same month last year, retail reported a significant real increase in sales of 4.6% in June, primarily due to a substantial year-on-year increase of 20.4% in online and mail-order sales. New car registrations by private individuals increased by 11.8% in July compared to the previous month; The three-month period shows a more moderate increase of 4.9%. Current sentiment continues to show no sign of a reversal of the relatively weak consumer sentiment, partly because consumers appear to be viewing economic developments with increasing scepticism.
• The inflation rate remained unchanged at +2.0% in July. Energy prices again provided noticeable relief, and food price increases stabilized. The core rate also remained unchanged from the previous month at +2.7%. Price pressure on services continues, albeit with declining momentum. Inflation is expected to stabilize at current levels over the remainder of the year.
• The labor market weakness will continue into the summer months. While unemployment rose in July, as is typical for the season, employment fell by 19,000 people in June, seasonally adjusted. Although leading indicators have improved slightly, the recent weak economic development means that labor market stagnation is likely to continue into the second half of the year.
• According to official statistics, the number of corporate insolvencies fell by 4.2% month-on-month to 2,036 cases in May. Compared to May 2024, the number of insolvencies increased by 5.3%. The IWH insolvency trend for partnerships and corporations shows an increase of 11.8% month-on-month for July, with a moderate impact on the labor market.

• Following the revival of the German economy at the beginning of the year, momentum is weakening in the second quarter. Despite brighter business expectations, industrial production and incoming orders remain volatile. Foreign trade is having a dampening effect on growth, as exports – especially to the USA – declined following the anticipation effects in the first quarter. The domestic economy is showing mixed trends: Recent declines in retail sales are offset by increases in new car registrations by private individuals and increased sales in the hospitality industry. Persistent geopolitical uncertainties and a persistently weak labor market are dampening consumer sentiment among private households. Overall, the recovery does not appear to be gaining further momentum in the second quarter – also due to the expiration of anticipation effects and ongoing uncertainty about US tariff policy.
• Production in the manufacturing sector increased by 1.2  % in May compared to the previous month, adjusted for price, calendar, and seasonal effects . While industrial output rose by 1.4  % and energy production increased significantly by 10.8 % , construction production declined significantly by 3.9  % . During the same period, new orders in the manufacturing sector declined by 1.4  % . Although industrial activity has continued its positive trend since the beginning of the year, a further deterioration in the outlook for the manufacturing sector cannot be ruled out given the persistently high level of trade and geopolitical uncertainty.
• Price-adjusted retail sales (seasonally adjusted, excluding motor vehicles ) fell by 0.9 % in May compared to the previous month. Compared to June 2024, however, retail sales reported a real increase of 2.5 % in June . New registrations of passenger cars by private individuals rose by 2.0 % in June ; in the more meaningful three-month comparison, however, they rose by only 0.4 % . Following a slight revival in private consumption in the first quarter of 2025, leading indicators for consumption currently paint a mixed picture.
• The inflation rate fell to +2.0 % in June  . Once again, energy prices provided noticeable relief, but food price increases also showed a downward trend. The core rate, at +2.7  %, was slightly lower than in May. This was due to easing price pressure for both goods and services. Inflation is expected to stabilize at current levels over the remainder of the year.
• Even at the end of the second quarter, no recovery in the labor market is in sight. While employment continued to stagnate in May, unemployment rose again in June, rising by 11,000 people, somewhat more than usual. Leading indicators do not point to any brightening of the employment outlook for the third quarter.
• According to the latest official data, the number of corporate insolvencies increased by 6.6  % in April 2025 compared to the previous month and by 11.5 % compared to April 2024. The IWH Insolvency Monitor for partnerships and corporations shows a decrease of 3.9% for June 2025 compared to the previous month. Compared to June 2024, there was an increase of 22.6 % .
   

• The overall economic momentum in the first quarter was somewhat stronger than initially reported, with GDP rising by 0.4% quarter-on-quarter after adjusting for price, seasonal and calendar effects. Alongside a continued recovery in private consumption and a revival in investment activity, pull-forward effects in exports linked to announced US tariffs also played a role. Current sentiment indicators remain at a low level and present a mixed picture; uncertainty regarding US trade policy remains very high. Consequently, despite expectations of stabilising private consumption, another externally driven slowdown of the German economy cannot be ruled out for the remainder of the year.
• Industrial output declined by 1.4% month-on-month in April (price, calendar and seasonally adjusted), following a marked increase in March. Both manufacturing (-1.9%) and energy production (-1.6%) decreased, while construction output rose significantly by 1.4%. In contrast, new manufacturing orders continued to grow, albeit more modestly, up 0.6%. The very volatile developments in certain sectors likely reflect the trade policy disruptions caused by US tariff measures.
• Real retail sales (excluding motor vehicles) fell by 1.1% month-on-month in April, after being revised sharply upwards to +0.9% in March. Compared to April 2024, retail trade reported a real sales increase of 2.3%. New passenger car registrations decreased by 5.6% in May following a strong increase in the previous month; the more reliable three-month comparison shows a 2.4% decline. Compared to May 2024, registrations rose by 1.2%. Leading consumer indicators mostly point to a modest improvement in the still subdued consumer sentiment.
• Inflation remained steady at 2.1% in May. Food price inflation stayed comparatively high at 2.8%, while energy prices dropped significantly by 4.6% compared to the previous year. The core inflation rate declined slightly to 2.8% in May. Going forward, inflation is expected to stabilise at the current level. Moderate upward pressure on energy and commodity prices is being offset by less dynamic wage growth under collective agreements and subdued overall demand.
• After a weak spring rebound, no labour market improvement is expected in the second quarter either. Seasonally adjusted unemployment increased by 34,000 in May, while employment almost stagnated in April, rising by only 3,000. Leading indicators improved slightly in May but continue to point to a subdued labour market outlook.
• Official data show a 3.6% month-on-month decline in corporate insolvencies in March 2025, but a 10.6% increase compared to March 2024. This resulted in a total 13.1% rise in insolvencies for the first quarter compared to the previous year. The IWH insolvency monitor for corporations recorded a 9.1% drop in May compared to April, but a 17.0% increase relative to May 2024.

• In the first quarter of 2025, the German economy posted a modest recovery, with GDP increasing by 0.2% quarter-on-quarter, adjusted for prices, seasonal and calendar effects. The rebound was primarily driven by private consumption, investments and foreign trade – due to frontloading effects in anticipation of the announced US tariffs. In addition to a revival in consumer-related services, both manufacturing and the construction sector also benefited from favourable conditions, reflected in rising output and more positive sentiment indicators. Nevertheless, business expectations, particularly in the export-oriented manufacturing industry, remain subdued. As a result, a renewed economic slowdown as the year progresses cannot be ruled out.
• By the end of Q1, output in the manufacturing sector rose sharply, climbing by 3.0% month-on-month (adjusted for prices, seasonal and calendar effects). Industrial production and construction output saw a robust increase of 3.6% and 2.1% respectively. However, energy production fell by 1.8%. New manufacturing orders – especially from abroad – also picked up noticeably in March, rising by 3.6% compared to the previous month (adjusted for prices, seasonal and calendar effects). Here too, frontloading effects related to the expected US tariff hikes likely played a role.
• In March, price-adjusted retail turnover (excluding motor vehicles) edged up by 0.4% month-on-month. Compared to the same month last year, retailers reported a real sales increase of 3.0%. Meanwhile, new car registrations in April rose sharply, increasing by 10.6% over March. However, the more meaningful three-month comparison shows a decline of 6.9%. Year-on-year, April registrations were down slightly (-0.2%). Current leading indicators point to a slight improvement in consumer sentiment, through starting from a low level.
• In April, the inflation rate eased further, falling to 2.1%. The rise in food prices has weakened again but remains above the overall inflation rate, while energy prices declined noticeably. In contrast, core inflation saw a marked rise. Going forward, inflation is expected to remain around the 2% mark, helped by falling energy and commodity prices, moderate increases in collectively agreed wages and subdued overall demand.
• Despite a weak spring revival, the labour market performed slightly better in April compared with the previous months. Seasonally adjusted unemployment rose by just 4,000, while total employment increased by 6,000 in March. However, given the continuing high level of uncertainty stemming from US trade policy and the persistently weak employment outlook, a turnaround in the labour market is not yet in sight.
• According to official data, the number of corporate insolvencies rose by 13.0% in February 2025 compared to the previous month, and by 15.9% year-on-year. With 2,068 applications filed, this marked the highest monthly figure since July 2015. The IWH Insolvency Monitor also rose, with April seeing an 11.4% increase in insolvencies among partnerships and corporations compared to March.
   

• The German economy is operating in a turbulent environment: The US tariff increases, announced and then partially suspended shortly thereafter, have increased uncertainty worldwide, triggered turbulence in the financial markets, and dampened global trade and growth prospects. While consumer-related services showed a slight recovery at the beginning of the year, the situation in the manufacturing sector and business-related services remains tense. The effects of US trade policy are not yet reflected in current economic indicators, and the risk of a significant global growth slowdown, which would also affect Germany, has increased considerably.
• After a positive start to 2025, production in the manufacturing sector fell by -1.3 % in February compared to the previous month, adjusted for price, calendar, and seasonal effects . Industrial output declined only slightly, at -0.5 % , while the declines in construction and energy were more significant, at -3.2% and -3.3%, respectively. While sentiment indicators for industry have recently improved, it is expected that this trend will not continue in light of US tariff policy.
• Price-adjusted retail sales (excluding motor vehicles ) rose slightly by 0.3 % in February compared to the previous month. Compared to the same month last year, the retail sector reported a real increase in sales of 4.4 % in February . New car registrations overall declined in March compared to both the previous month (-2.2 %) and the same month last year (-3.9 %) . Consumer sentiment is also likely to experience further setbacks in light of recent geopolitical developments.
• The inflation rate continued to approach the 2 % mark in March, rising to 2.2 % . Food prices continued to rise, while energy prices declined more sharply than previously. The core rate declined somewhat, likely due to lower price pressure in the services sector, which, however, remained above average. Inflation-dampening factors are expected to continue to prevail throughout the rest of the year.
• Given the ongoing economic weakness, the spring recovery in the labor market this year has been exceptionally weak. Seasonally adjusted unemployment rose again by 26,000 people , and employment also fell by 10,000 in February, somewhat more than usual. While the number of people on short-time work in January was once again higher than the previous year at 240,000 , notifications of short-time work have stabilized at a somewhat lower level than previously. Since leading indicators point to a further rise in unemployment and a continued decline in employment, the labor market is expected to remain weak for the time being.
• According to official data, the number of corporate insolvencies rose slightly in January 2025 compared to the previous month (+2.2 % ). The IWH insolvency trend also shows a slight increase of 1.6 % to 1,459 insolvencies of partnerships and corporations for March. According to IWH data, a total of 4,237 insolvencies were registered in the first quarter of 2025, an increase of 18.4 % compared to the first quarter of 2024.
   

• The economy remains weak in view of restrained domestic and foreign demand coupled with increased uncertainties about the trade and geopolitical outlook. Latest figures show a stabilisation in industry contrasting with a decline in services. Current leading indicators reveal mixed sentiment in the German economy, with the trend indicating a bottoming out. At the same time, the projects of the future governing coalition that are currently being discussed could trigger stabilising expectations and greater planning security for households and commerce.
• Output in the goods-producing sector made a positive start to 2025 with a 2.0% rise from December to January. Within this figure, industrial output grew appreciably, by 2.6%, whilst the development in the construction sector was weak, at +0.4%, and the energy sector saw a slight decline of -0.5%. There was a setback in the volume of new orders at the beginning of the year: they fell by 7.0% in January. In the goods-producing sector as a whole, no cyclical recovery can yet be seen, even if some previous production falls were offset at the beginning of the year. This is reflected in business sentiment: according to ifo Business Climate and S&P Global, it remains at a low level.
• Price-adjusted retail turnover (excluding motor vehicles) rose slightly by 0.3% in January (month-on-month). Year-on-year, the retail sector experienced real sales growth of 3.0% in January. Total new car registrations declined in February by -6.8% (month-on-month) and -6.4% (year-on-year). Worries about job security and persisting geopolitical uncertainties recently meant less planning security and inclination to purchase on the part of consumers.
• The inflation rate was unchanged in February, at +2.3%, close to the monetary policy target of 2%. Whilst the cost of foodstuffs rose appreciably more in year-on-year terms than in January, the core inflation rate softened, and energy prices fell somewhat more strongly. Not least due to administrative price rises at the beginning of the year, tangible falls in the inflation rate are not anticipated until later in the year.
• The development on the labour market remains weak at the beginning of the year. Whilst seasonally adjusted unemployment rose slightly further in February, employment again declined in January. The volume of realised short-time work in December was much higher than a year before, but the notifications of short-time work have stabilised at a rather lower level than in the autumn. In view of weakening demand for labour and a lack of economic stimuli, the spring recovery is likely to be rather restrained this year.
• According to official data, the number of corporate insolvencies remained virtually unchanged between November and December 2024 (+0.2%). For the whole of 2024, there was a rise of 22.4% compared with 2023. The bankruptcy indicator of the German Economic Institute (IWH) in Halle recorded 1,436 insolvencies in February, or 7.0% more than in January. At the same time, the IWH believes that it is feasible, going by leading indicators, that the phase of rising insolvency numbers may be over for the time being.
   

• At the end of 2024, German economic output was weaker than initially reported, with GDP declining by 0.2% compared to the previous quarter. Current leading indicators show a slight improvement, although the dichotomy between the positive trend in the services sector and the recessionary development in the manufacturing sector appears to be continuing. Against the backdrop of persistently weak domestic and foreign demand, increased domestic and geopolitical risks, particularly with regard to US trade policy, and the resulting dampened consumer and investment sentiment, a noticeable economic recovery is not yet evident at the beginning of the year.
• Incoming orders in the manufacturing sector increased noticeably in December by 6.9% compared to the previous month; adjusted for large orders, they rose by 2.2%. In the fourth quarter as a whole, incoming orders in the manufacturing sector remained unchanged. Production in the manufacturing sector fell by 2.4% in December at the end of 2024 compared to the previous month. This was mainly due to a decline in industrial production. The construction industry stagnated, while the energy sector expanded slightly. In the fourth quarter as a whole, production in the manufacturing sector continued to decline at -0.9%. Given the sentiment indicators from ifo and S&P Global, which still show a low level, there are no signs of a turnaround in the industrial economy at the beginning of the year.
• Real retail sales (excluding motor vehicles) fell by 1.6% in December compared to the previous month, but the fourth quarter saw an overall increase of 0.6%. New car registrations fell in January compared to both the previous month (-5.5%) and the same month last year (-2.8%). Concerns about job security and ongoing geopolitical uncertainty continue to hinder a noticeable recovery in the consumer climate.
• The significant increase in consumer prices at the end of 2024 did not continue in January. The inflation rate fell by 0.3 percentage points to +2.3% in January. This was mainly due to a significantly weaker increase in food prices (+0.8%) and the continued decline in energy prices (-1.6%). The core rate (excluding energy and food) also fell significantly by 0.4 percentage points to 2.9%. The lower price pressure on services played a role here.
• The labour market continues to develop relatively robustly, but is increasingly suffering from the weak economic development. Although the number of employed people rose slightly in December, registered unemployment and underemployment also increased in January. The number of people on short-time work was significantly higher in November than in the same month last year. The leading indicators do not suggest that there will be any noticeable recovery in the labour market at the beginning of 2025.
• The IWH insolvency trend shows 1,342 insolvencies for January, which is almost unchanged from the previous month, but remains at a comparatively high level. The number of employees affected by insolvency is at a significantly higher level compared to historical figures.
  
   

• According to the Federal Statistical Office, gross domestic product fell by 0.1 % in the fourth quarter, adjusted for price, seasonal and calendar effects . The preliminary annual GDP result for 2024 shows a price-adjusted decline of 0.2 percent. While the manufacturing sector continues to be characterized by a decline in production, the situation in consumer-related services is somewhat more favourable. A noticeable economic recovery in Germany is only likely to begin with clear prospects for the future economic, financial and geopolitical framework conditions.
• Production strengthened somewhat in November, but orders fell due to volatile large orders. Overall, there are no signs of a turnaround in the industrial economy. In the more meaningful three-month comparison, industry reduced its output by 1.3 % , although at the same time orders received in the manufacturing sector increased by 1.7 % . The sentiment indicators from ifo and S&P Global are still at a low level.
• The situation in the retail sector (excluding motor vehicles ) developed slightly weaker in November, with a price-adjusted decline in sales of 0.1 % . However, compared to the same month last year, retail sales rose by 3.0 % , and in the three-month comparison an increase of 2.3 % . New registrations of passenger cars overall fell significantly in December, both compared to the previous month (-6.2 % ) and the same month last year (-7.1 %) . In the three-month comparison, however, there was an increase of 10.1 % . In view of increasing concerns about job security and ongoing domestic and geopolitical uncertainties, a noticeable recovery in the consumer climate is still pending.
• The upturn in consumer prices observed in recent months continued at the end of the year. The inflation rate is expected to have risen significantly to +2.6 % in December , for a number of reasons: the year-on-year decline in energy prices was less pronounced, as expected, and the price increase in the services sector remains high. This is also reflected in the core rate (excluding energy and food), which also continued to rise.
• Despite ongoing economic stagnation, the labour market is developing relatively stably at the end of the year, but the outlook for the future remains cloudy. The number of employed people increased in November, but at the same time registered unemployment continued to rise moderately in December. The number of people on short-time work also increased again in December. The early indicators point to a further decline in demand for labour, so that a reversal of the weak development in the labour market is not expected at the beginning of the year either.
• According to final results in October, corporate insolvencies rose by 35.9 % compared to October 2023, with 2,012 cases. A total of 18,234 were registered from January to October, 23.6 % more than in the same period last year. The IWH insolvency trend in December was almost unchanged compared to November, but at the same time was 24.3 % higher than in the same month last year. The insolvency situation remains dynamic.
  
   

• According to the revised GDP figures from the Federal Statistical Office, the German economy almost stagnated in the third quarter. While losses were recorded in the manufacturing and construction sectors as well as in business-related service providers, there were increases in public service providers and in consumer-related service sectors (hotels and restaurants, retail). This suggests that private households are becoming less reluctant to buy, not least as a result of sharp increases in nominal and real wages. However, the renewed deterioration in recent sentiment indicators and the ongoing high level of geopolitical and domestic uncertainty do not yet indicate a sustainable economic recovery.
• Production and orders began the final quarter with declines. The industrial economy is still in a downturn. In the less volatile three-month comparison, however, the decline in production in the manufacturing sector was not as severe as before at -0.4 % , and incoming orders in the manufacturing sector even increased by 2.7 % . Nevertheless, the renewed deterioration in the sentiment indicators from ifo , S&P Global and ZEW suggests that a sustainable turnaround in the industry cannot be expected at present.
• The situation in retail (excluding motor vehicles ) has changed little recently. Price-adjusted sales in retail (excluding motor vehicles ) fell by 0.5 % in October compared to the previous month; compared to the same month last year, they were 2.2 % higher. Private new car registrations also barely changed in November after a strong increase in October (+0.3 % ). In view of increasing concerns about job security and ongoing geopolitical uncertainties, a sustainable recovery in the consumer climate is likely to be delayed for the time being.
• As expected, the inflation rate rose slightly to 2.2 % in November , but consumer prices fell by 0.2 % compared to the previous month . The fact that the annual rate increased in the last two months is mainly due to the elimination of the base effect for energy and package holidays. The inflation rate also averaged 2.2 % for the first eleven months of the year .
• Economic weakness continues to shape the development of the labor market. In October, the number of employed people fell again slightly after seasonal adjustment, and unemployment rose in November. At the same time, short-time work increased significantly in November. In view of the falling demand for labor and the announcements of job cuts in the manufacturing sector, the weak development of the labor market is expected to continue in the coming months.
• According to the IWH insolvency trend , the number of insolvencies fell slightly in November, but is still at a significantly higher level. In November, 1,345 insolvencies of partnerships and corporations were reported, a decrease of 12.1 % compared to the previous month , but still 37.7 % above the same month last year. The IWH also expects the number of insolvencies to remain high in the coming months , which are noticeably higher than the average values ​​for the pre-crisis years 2016 to 2019.
  
   

• In the third quarter, economic development in Germany picked up slightly, with real GDP growing by 0.2 % . This was driven by government and private consumption; on the production side, the service sectors may once again have driven growth. Current sentiment indicators from private households and companies, as well as a stabilization of the order situation in industry, suggest that economic development will bottom out at the turn of the year 2024/25. However, uncertainties regarding the economic consequences of the US presidential election have increased.
• Production ended the third quarter on a weak note, while incoming orders again increased noticeably at the end of the quarter. The recent positive development of incoming orders, particularly from abroad, as well as the recent improvement in the sentiment indicators from ifo and S&P Global suggest that the industrial economy will stabilize in the coming months.
• The situation in retail (excluding motor vehicles ) has recently improved somewhat. In September, price-adjusted sales were 1.2 % higher than the previous month. New car registrations rose significantly by 11.7 % in October . After the disappointing development in recent months, current leading indicators point to a stabilization in consumer sentiment in Germany. However, concerns about job security and geopolitical developments remain risk factors for a sustainable recovery in the consumer climate.
• The inflation rate rose to +2.0 % in October . One of the main reasons for the increase was that food prices continued to rise to +2.3 % . At the same time, the price-dampening effect of cheaper energy has weakened. However, energy prices continued to fall significantly in October at -5.5 % . However, given the sharp decline in energy prices in the fourth quarter of 2023, the negative year-on-year rates are likely to end soon. However, inflation should remain moderate over the rest of the year.
• The usual autumn revival in the labor market is still not happening due to the economic weakness. According to a revision of the official data, employment fell in September for the fourth time in a row after seasonal adjustment. At the same time, both registered unemployment and underemployment rose again noticeably in October. Given that demand for labor remains subdued according to leading indicators, a noticeable revival in the labor market is not foreseeable over the rest of the year.
• The IWH insolvency trend shows 1,530 insolvencies of partnerships and corporations in October, an increase of 17.4 % compared to the previous month.

The global economy remained robust in the third quarter of 2025. In the United States, GDP is likely to have grown markedly again despite the higher import tariffs. In China, by contrast, economic activity weakened somewhat. This was mainly due to weaker domestic demand, whilst exports remained fairly buoyant. In the euro area, economic activity grew slightly again. Overall, the global economy proved resilient to the burdens arising from trade disputes.

Global trade in goods also held up well overall in the summer months, despite the sharply risen US tariffs. Nevertheless, there were marked changes in the regional structure of global trade. US foreign trade, which accounted for around 14 % of global imports of goods in 2024, was impacted to a considerable degree by the restrictive trade policy. In particular, imports to the United States from China fell substantially in comparison with the start of the year. Outside of the United States, international trade in goods remained buoyant. It remains to be seen whether the burdens arising from trade policy disputes will have a greater impact on global trade over the remainder of the year. 

International trade policy continued to be characterised by considerable unease. The US administration pushed ahead with its trade policy agenda. Various sector-specific tariff rates were increased. At the same time, the US administration reached framework agreements for future trade relations with other, predominantly Asian countries. As in previous negotiations, the United States was able to gain concessions from its partners. There was a certain degree of de-escalation in the trade dispute between the United States and China. Both parties agreed on moderate reductions in tariffs as well as additional relief measures. Prior to this, both sides had exchanged significant threats. In particular, potential restrictions on the export of rare earths by China would have also entailed considerable risks for the European economy. However, even after the agreement between the United States and China, the risk of renewed escalation remains.

German economy unable to break free from economic weakness

Real gross domestic product (GDP) is likely to flatten at best in the third quarter of 2025. Industry is continuing to suffer due not only to structural problems, but also raised US tariffs. Output, real sales and real exports of goods saw a decline recently. The same is now also true for industrial new orders. Moreover, the still low level of capacity utilisation in industry and weak competitiveness probably continued to weigh on investment activity and thus on demand for capital goods. Standing somewhat in contrast to this, however, is the improvement in short-term production expectations and, above all, export expectations in September reported by the ifo Institute. A broad-based recovery is likewise still to materialise in the construction sector. Construction output rose slightly averaged across July and August. The increase was attributable solely to the finishing trades, though, whilst output in building construction and civil engineering was lower. The situation in civil engineering is still significantly better than in building construction. Private consumption is likely to have registered a slight increase at most. Activity in the services sector was likewise sluggish. Service providers’ output declined slightly in July and the business situation of consumer-related service providers deteriorated in the third quarter, according to surveys conducted by the ifo Institute. However, the S&P Global Purchasing Managers’ Index remained just above the expansion threshold in the services sector.

German economy likely to grow slightly in third quarter

The German economy is proving relatively robust in a difficult environment. Overall, from today’s perspective, real gross domestic product (GDP) could increase slightly in the third quarter of 2025. Investment conditions for firms remain unfavourable amid weak competitiveness and low capacity utilisation. However, there are no signs of any major setback for industry in the third quarter, despite additional burdens caused by the new US tariffs. On the contrary, it could even make a positive contribution to GDP growth. Industrial output rose steeply in July after seasonal adjustment. Price-adjusted sales increased significantly as well. As this noticeably good start to the quarter is based on notable developments in the case of the mechanical engineering sector and car manufacturers, it is unlikely to be sustained. However, combined with the leading indicators, it suggests that output will increase on a quarterly average. In fact, the underlying trend in new orders is still pointing upwards. In addition, following the preliminary trade agreement between the United States and the EU, survey indicators showed signs of a slowdown in August, but remained relatively robust overall. Exports to the United States are unlikely to weigh as heavily as in the second quarter. These had risen sharply in the first quarter ahead of the introduction of US tariffs in April and then plummeted. A recovery is yet to materialise in the construction sector. Financing conditions remained stable and demand is tending to increase. However, improved demand is not yet reflected in higher output. Private consumption is likely to rise slightly, if at all. The labour market is not currently providing any stronger stimulus in the form of rising employment, and the strong wage growth so far is likely to tail off. There are signs of a sideways movement in the services sector (excluding trade). According to the ifo Institute, businesses believe their current business situation to be worse averaged across July and August than in the previous quarter, but they were more optimistic looking ahead. 
 

Global economy robust so far despite trade disputes

The second quarter of 2025 once again saw the global economy in robust shape. US gross domestic product (GDP) rose significantly in the second quarter after having fallen slightly at the start of the year. The Chinese economy recorded similar growth to the first quarter despite the higher tariffs imposed by the United States. GDP in the euro area increased again slightly in the second quarter following the strong start to the year. The global economy appears so far to have been able to withstand the tougher and in part erratic US trade policy. This resilience was supported by the short-term front-loading and diversion of trade flows.  

Looking ahead, however, the United States’ erratic, protectionist trade policy is likely to place more of a strain on the global economy. In the year to date, the average tariff rate imposed by the United States on all its trading partners has climbed by more than 14 percentage points, reaching its highest level since the 1930s. A deal with the United States’ most important trading partner, China, is still pending, however. Given the in part erratic US tariff policy, the risk of an escalation of the trade disputes persists. This and the tariff hikes that have already been adopted are likely to place a mounting strain on global trade. Overall, the trade policy concessions made by some partner countries of the United States are too insignificant to offset the adverse effects of additional US tariffs on global trade. Global trade activity was already sharply lower in April and May, after US imports in particular had previously risen sharply in anticipation of tariff hikes. In addition to the unwinding of these front-loading effects, the initial dampening impact of the increased tariffs on demand from the United States became apparent. The medium-term outlook for global trade will depend on whether further countries give in to the temptations of protectionism and likewise seal themselves off more.
 

German economic output more or less unchanged in the second quarter of 2025

Lapsing anticipatory effects contributed to the fact that seasonally adjusted real gross domestic product (GDP) probably stagnated in the second quarter. In anticipation of higher tariffs, Germany’s industrial output and exports had risen significantly in the first quarter. In the second quarter, some US import tariffs on German goods and services were suspended, while future tariff levels remained unclear. However, it can be assumed that the high level of activity normalised somewhat compared with the previous quarter. Averaged across April and May, real exports of goods stagnated quarter on quarter. Meanwhile, industrial output also expanded with somewhat less momentum. Moreover, in the second quarter, the services sector likely expanded its activity slightly at best, partly because households’ propensity to save probably did not decline any further and private consumption therefore provided less impetus. The construction sector is expected to make a significantly negative contribution to growth.

The underlying basic trend remains weak overall. Domestic and foreign demand for German industrial products picked up somewhat but is still weak. Low capacity utilisation in industry continues to weigh on firms’ propensity to invest. Business sentiment did improve in June. In particular, business expectations as surveyed by the ifo Institute brightened. In addition, the S&P Global Purchasing Managers’ Index for June rose just above the expansion threshold again. However, this may partly reflect expectations about the impact of the more expansionary fiscal stance. Its impact on economic output is expected only with a delay, though. US tariff policy threatens to bring additional headwinds to German exporters in the short term. In particular, US President Trump recently announced that additional tariffs of 30 % (in place of the baseline 10 % tariff introduced in April) on products imported from the EU will enter into force from 1 August 2025 if no agreement is reached before that date. In the June Forecast for Germany, the Bundesbank had still assumed a tariff rate of 10 % for the baseline. If the newly announced tariff rate takes effect, it would thus represent a considerable downside risk to the economy. With regard to the adverse risk scenario also outlined in the June Forecast for Germany, however, two things should be noted. On the one hand, it only assumed an additional tariff rate of 20 % for EU exports. On the other hand, it assumed other factors that would act as a drag, such as reciprocal EU tariffs of the same amount, once again very high tariffs between the United States and  China, and persistently high uncertainty as well as strong financial market reactions. The extent to which these factors will become relevant is currently unclear.
 

The recovery of the German economy is being delayed by the turmoil caused by international trade policy. Only gradually will economic activity be boosted by additional fiscal measures.

The new US tariffs and the uncertainty surrounding US policy are set to weigh on economic growth both this year and the next. In connection with this, the rise in GDP will be weakened by the imposed tariffs themselves and the associated general uncertainty. By the end of 2027, macroeconomic growth is estimated to be around ¾ percentage point lower solely on account of these factors.

From next year onwards, the expansionary fiscal policy stance will contribute to the significant economic recovery that is set to begin then. The demand effects from increased defence and infrastructure spending are estimated to support the cumulative increase in GDP by ¾ percentage point over the forecast horizon. The general government deficit ratio will rise to just over 4 % by 2027, partly owing to other measures. In the wake of strong growth in spending by the social security fund, contribution rates will rise steeply. 

Overall, real GDP in 2025 is likely to tread water in calendar-adjusted terms, but will then see strong growth again, at 0.7 % in 2026 and 1.2 % in 2027. In view of this, the growth outlook has mainly been revised downwards for 2025 and upwards for 2027 relative to last December’s Forecast for Germany.

The inflation rate as measured by the HICP will fall to 2.2 % this year before temporarily dropping to 1.5 % in 2026 and rising again to 1.9 % in 2027. The temporarily lower inflation rate in the coming year will be driven by lower energy commodity prices and the appreciation of the euro against the US dollar as well as directly energy price-lowering fiscal measures. Core HICP inflation (excluding energy and food) will stabilise around 2 % from 2026 onwards.

The inflation outlook for 2025 and 2026 has thus been revised significantly downwards compared to the Forecast for Germany from last December.

The outlook around this baseline is shaped by major uncertainties surrounding trade disputes, geopolitical conflicts and the specifics of German fiscal policy. There are risks to economic growth and inflation in both directions.

The global economy was still in robust shape at the start of 2025. Anticipatory effects resulting from expectations of further US tariffs even appear to have stimulated global trade and industrial production temporarily. This is likely to be one reason why economic output in the euro area increased markedly in the last quarter. In China, the pace of growth remained solid at first. In the United States, while real gross domestic product (GDP) decreased slightly against a backdrop of a sharp upturn in imports, other indicators did not yet point to a significant deterioration in economic activity.

From the second quarter onwards, the US’s pivot towards protectionist trade policy is likely to weigh increasingly on the global economy. Uncertainty over trade policy had already risen significantly in the aftermath of the election of the new US President. At the start of 2025, the new US administration then began to impose the first additional tariffs on imports from various countries. Further tariff increases followed. Trading partners resorted to retaliatory measures in some cases. Some of the tariff increases were then withdrawn. In trade between the United States and China, reciprocal tariff rates temporarily shot up to prohibitive levels. Recently, the average effective tariff rate of the United States for all trading partners was more than 13 percentage points higher than at the start of the year, putting it at its highest level since the 1930s. Many trading partners of the United States are being threatened with further tariff hikes from July onwards in the event of negotiations to reshape bilateral trade relations failing. It is already apparent that the new tariffs and the ongoing trade policy uncertainty are proving an increasing drag on the global economy. According to business surveys, business expectations have deteriorated significantly over the last few months not only in the manufacturing sector but also in services. 

German economic activity slightly stabilised in the reporting period, but outlook significantly gloomier

Economic output in Germany is likely to have increased slightly in the first quarter of 2025, but could suffer a setback in the second quarter. In the first quarter of 2025, real gross domestic product (GDP) is likely to have risen slightly after seasonal adjustment, following a decline in the previous quarter. This is suggested by the recent increase in industrial and construction output. Service providers are also likely to have expanded their activity somewhat, possibly buoyed by slightly higher private consumption. Real sales in the retail trade, for instance, continued to rise in January and February. However, the underlying cyclical trend remains weak overall. While demand in the construction industry has already recovered from a very depressed level, domestic and foreign demand for German industrial products has remained sluggish. Low capacity utilisation in industry is weighing on firms’ propensity to invest. The labour market is weakening and dampening consumer sentiment. In March, there were positive signals from business sentiment. The ifo business climate index rose markedly and on a broad front. Business expectations, in particular, brightened. In addition, the S&P Global Purchasing Managers’ Index for March was above the expansion threshold in both the services and manufacturing sectors. However, the much more expansionary future fiscal policy stance, which is on the cards following the amendments to Germany’s Basic Law, is likely to have been a major factor in this. Yet a certain time lag is expected before fiscal policy has any major supporting effect on economic output. In the short term, meanwhile, there is a risk of additional headwind for the export industry as a result of US tariff policy. The recent developments and the resulting strong responses in the financial markets were not yet reflected in the March sentiment indicators. The S&P Global Purchasing Managers’ Index fell markedly in April. From today’s perspective, economic output is expected, overall, to decline again in the second quarter.

Muted but positive start for the Germany economy in the new quarter

The German economy is likely to pick up slightly in the first quarter of 2025. Both industry and construction increased output in January, with one-off effects likely to have played a significant part. The rise in industrial output followed a weak year-end. The timing of the December public holidays in conjunction with weak industrial activity probably played a role here. In the construction sector, the favourable weather conditions provided a slight boost in January. However, the basic tendency in industry in particular remains weak in the first quarter. For the time being, the slight recovery in foreign demand for German industrial products has not continued at the beginning of the year. This highlights the persistently difficult competitive position. In addition, investment is still currently facing headwinds. The high degree of uncertainty surrounding economic and political conditions is dampening the propensity to invest, and low industrial capacity utilisation is weighing on investment. Private consumption did not provide any stimulus to growth at the beginning of the year. Consumers were unsettled by the cooling labour market and concerns about job losses, amongst other things. They were reluctant to make use of the additional scope for spending on consumption that had been created last year by the sharp rise in wages. The services sector as a whole, however, is likely to make a slightly positive contribution to growth in the first quarter, even without impetus from private consumption. Overall, economic output is thus likely to increase slightly in the first quarter, although the underlying cyclical trend remains weak.

The future outlook for the German economy is particularly uncertain at present. Compared with expectations from the last Forecast for Germany, the restrictive and uncertain trade policy of the United States could dampen exports more strongly, especially if more extensive tariffs against the EU were to be implemented. At the same time, the considerably more expansionary stance of German fiscal policy, which was envisaged in the results of the preliminary coalition talks of the parties negotiating the formation of a new government, could give a stronger boost to economic output in the coming years.
 

The global economy expanded moderately again in the final quarter of 2024. This expansion varied across regions. Economic activity remained buoyant in the United States, and in China it strengthened somewhat due to government stimulus measures and strong exports. By contrast, economic output in the euro area rose only slightly. This was also due to the elimination of one-off effects that had supported growth in the third quarter, such as the Olympic Games in Paris. 

The regional dichotomy in industrial activity also continued in the fourth quarter. Globally, industrial output is likely to have expanded quite substantially in the final quarter of 2024. However, output growth continued to be driven primarily by emerging market economies. In the advanced economies, industrial activity remained weak. Exports of goods also only picked up in the group of emerging market economies. Expectations of higher US import tariffs probably contributed here. 

The tighter US trade policy stance could weigh heavily on world trade and global activity. Newly elected US President Trump intensified his tariff threats against Canada and Mexico, the United States’ main trading partners. US import tariffs on China have already been raised, although so far not nearly by as much as was promised before the presidential election. Recently, the US administration has also adopted additional tariffs on all imports of steel and aluminium and announced broad-based tariff increases against many of its trade partners. Actions of this kind could provoke retaliatory measures from affected countries. Should that occur, the United States has announced that it will respond with further tariff steps. This could lead to serious trade conflicts. Against this backdrop, trade policy uncertainty rose considerably worldwide. The heightened uncertainty alone could already be dampening global economic activity. 
 

The German economy remained listless in the fourth quarter of 2024.

Based on an initial and very early estimate released by the Federal Statistical Office, real GDP declined by 0.1% in seasonally adjusted terms. Industry is again likely to have remained particularly weak, being under high pressure to adapt to changing structural conditions. Foreign orders remained very sluggish despite some degree of recovery. The ifo Institute’s business climate index deteriorated again. The construction sector is unlikely to have provided much growth stimulus. A more favourable development in civil engineering is still being offset by the decline in building construction. By contrast, private consumption and the related services sectors are likely to have provided positive impetus. The steep rise in wages provided scope for additional consumer spending. However, consumers remained unsettled and this prevented a stronger recovery in consumption.  It is also unlikely that the German economy will manage to escape the prolonged period of stagnation in the first quarter of 2025. 

Economic output in Germany declined in 2024 as a whole. According to preliminary calculations by the Federal Statistical Office, real GDP fell by 0.2% on the previous year (and also by 0.2% after calendar adjustment). High financing costs, heightened economic policy uncertainty and the severe capacity underutilisation weighed on investment. The reduced competitiveness of German industry and high competitive pressure, especially from China, were reflected in dwindling exports. Households held back on spending despite sharply rising wages. As a result, their saving rate rose while private consumption increased only slightly.

 

The German economy is not only struggling with persistent economic headwinds, but is also having to adapt to changing structural conditions. This is affecting the industrial sector in particular, putting a strain on its export business and investments. The labour market, too, is now responding noticeably to the protracted weakness of economic activity. This is dampening private consumption. Against this backdrop, the German economy is set to stagnate in the winter half-year 2024‑25 and only begins to make a slow recovery over the course of 2025. Exports then gradually benefit from the growing sales markets, albeit to a lesser extent than used to be the case. After some delay, business investment also goes back up on the back of rising capacity utilisation and lower financing costs. Private consumption rises consistently, but is initially noticeably slowed by a temporary weakening of the labour market and a significant decline in wage growth. 

Calendar-adjusted real GDP falls again slightly in 2024, by 0.2 %, then grows by 0.2 % in 2025, 0.8 % in 2026 and 0.9 % in 2027. The growth outlook is thus revised sharply downwards relative to the June 2024 Forecast for Germany over the entire forecast horizon. This is primarily due to the more persistent weakness in the industrial sector, which is, in addition, largely considered to be structural now, and the consequently significantly gloomier outlook for exports and business investment. Private consumption is also less dynamic, no longer acting as an independent driver of the expected recovery. 

 

The global economy remained on a moderate growth path in the third quarter of 2024. The United States was yet again its main pillar. Its gross domestic product (GDP) rose significantly in the third quarter, too, after price and seasonal adjustment. On the other hand, Chinese economic activity was once again anaemic, not least because of the ongoing real estate market crisis. Economic output in the euro area increased markedly, mainly due to one-off effects.

The recent improvement in industry is unlikely to last. As in the second quarter, global industrial output rose perceptibly in the summer months, too. The economies of Asia, which are highly integrated into international value chains, were a significant factor in this. Global trade in goods expanded even more buoyantly. However, frontloading effects appear to have been playing a role in this. In the previous quarter, companies had already restocked their inventories in anticipation of possible trade policy frictions and the threat of disruptions to shipping. It thus remains to be seen whether the recent upswing will prove sustainable. This is also shown by recent purchasing managers’ surveys, according to which output growth in the manufacturing sector globally came to a standstill as of late and order books have continued to shrink. Political demands for new tariff barriers pose considerable additional risks to international trade.

At its meeting on 30 October 2025, the Governing Council decided to keep the three key ECB interest rates unchanged. Inflation remains close to the 2% medium-term target and the Governing Council’s assessment of the inflation outlook is broadly unchanged. The economy has continued to grow despite the challenging global environment. The robust labour market, solid private sector balance sheets and the Governing Council’s past interest rate cuts remain important sources of resilience. However, the outlook is still uncertain, owing particularly to ongoing global trade disputes and geopolitical tensions.

The Governing Council is determined to ensure that inflation stabilises at its 2% target in the medium term. It will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance. In particular, the Governing Council’s interest rate decisions will be based on its assessment of the inflation outlook and the risks surrounding it, in light of the incoming economic and financial data, as well as the dynamics of underlying inflation and the strength of monetary policy transmission. The Governing Council is not pre-committing to a particular rate path.

At its meeting on 11 September 2025, the Governing Council decided to keep the three key ECB interest rates unchanged. Inflation is currently at around the 2% medium-term target and the Governing Council’s assessment of the inflation outlook is broadly unchanged.

The September 2025 ECB staff macroeconomic projections for the euro area present a picture of inflation similar to that projected in June. They see headline inflation averaging 2.1% in 2025, 1.7% in 2026 and 1.9% in 2027. For inflation excluding energy and food, they expect an average of 2.4% in 2025, 1.9% in 2026 and 1.8% in 2027. The economy is projected to grow by 1.2% in 2025, revised up from the 0.9% expected in June. The growth projection for 2026 is now slightly lower, at 1.0%, while the projection for 2027 is unchanged at 1.3%.

The Governing Council is determined to ensure that inflation stabilises at its 2% target in the medium term. It will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance. In particular, the Governing Council’s interest rate decisions will be based on its assessment of the inflation outlook and the risks surrounding it, in light of the incoming economic and financial data, as well as the dynamics of underlying inflation and the strength of monetary policy transmission. The Governing Council is not pre-committing to a particular rate path.

At its meeting on 24 July 2025, the Governing Council decided to keep the three key ECB interest rates unchanged. Inflation is currently at the 2% medium-term target. The incoming information is broadly in line with the Governing Council’s previous assessment of the inflation outlook. Domestic price pressures have continued to ease, with wages growing more slowly. Partly reflecting the Governing Council’s past interest rate cuts, the economy has so far proven resilient overall in a challenging global environment. At the same time, the environment remains exceptionally uncertain, especially because of trade disputes.

The Governing Council is determined to ensure that inflation stabilises at its 2% target in the medium term. It will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance. In particular, the Governing Council’s interest rate decisions will be based on its assessment of the inflation outlook and the risks surrounding it, in light of the incoming economic and financial data, as well as the dynamics of underlying inflation and the strength of monetary policy transmission. The Governing Council is not pre-committing to a particular rate path.

At its meeting on 5 June 2025, the Governing Council decided to lower the three key ECB interest rates by 25 basis points. In particular, the decision to lower the deposit facility rate – the rate through which the Governing Council steers the monetary policy stance – was based on its updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission.

Inflation is currently at around the Governing Council’s 2% medium-term target. In the baseline of the June 2025 Eurosystem staff macroeconomic projections for the euro area, headline inflation is set to average 2.0% in 2025, 1.6% in 2026 and 2.0% in 2027. The downward revisions compared with the March 2025 ECB staff macroeconomic projections for the euro area, by 0.3 percentage points for both 2025 and 2026, mainly reflect lower assumptions for energy prices and a stronger euro. Staff expect inflation excluding energy and food to average 2.4% in 2025 and 1.9% in 2026 and 2027, broadly unchanged since March.

Staff see real GDP growth averaging 0.9% in 2025, 1.1% in 2026 and 1.3% in 2027. The unrevised growth projection for 2025 reflects a stronger than expected first quarter combined with weaker prospects for the remainder of the year. While the uncertainty surrounding trade policies is expected to weigh on business investment and exports, especially in the short term, rising government investment in defence and infrastructure will increasingly support growth over the medium term. Higher real incomes and a robust labour market will allow households to spend more. Together with more favourable financing conditions, this should make the economy more resilient to global shocks.
 

At its meeting on 17 April 2025, the Governing Council decided to lower the three key ECB interest rates by 25 basis points. In particular, the decision to lower the deposit facility rate – the rate through which the Governing Council steers the monetary policy stance – was based on its updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission.

The disinflation process is well on track. Inflation has continued to develop as staff expected, with both headline and core inflation declining in March. Services inflation has also eased markedly over recent months. Most measures of underlying inflation suggest that inflation will settle at around the Governing Council’s 2% medium-term target on a sustained basis. Wage growth is moderating, and profits are partially buffering the impact of still elevated wage growth on inflation. The euro area economy has been building up some resilience against global shocks, but the outlook for growth has deteriorated owing to rising trade tensions. Increased uncertainty is likely to reduce confidence among households and firms, and the adverse and volatile market response to the trade tensions is likely to have a tightening impact on financing conditions. These factors may further weigh on the economic outlook for the euro area.

The Governing Council is determined to ensure that inflation stabilises sustainably at its 2% medium-term target. Especially in current conditions of exceptional uncertainty, it will follow a data-dependent and meeting-by-meeting approach to determining the appropriate monetary policy stance. In particular, the Governing Council’s interest rate decisions will be based on its assessment of the inflation outlook in light of the incoming economic and financial data, the dynamics of underlying inflation and the strength of monetary policy transmission. The Governing Council is not pre-committing to a particular rate path.

At its meeting on 6 March 2025, the Governing Council decided to lower the three key ECB interest rates by 25 basis points. In particular, the decision to lower the deposit facility rate – the rate through which the Governing Council steers the monetary policy stance – is based on its updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission.

The disinflation process is well on track. Inflation has continued to develop broadly as staff expected, and the March 2025 ECB staff macroeconomic projections for the euro area closely align with the previous inflation outlook. Staff now see headline inflation averaging 2.3% in 2025, 1.9% in 2026 and 2.0% in 2027. The upward revision in headline inflation for 2025 reflects stronger energy price dynamics. For inflation excluding energy and food, staff project an average of 2.2% in 2025, 2.0% in 2026 and 1.9% in 2027.

Most measures of underlying inflation suggest that inflation will settle at around the Governing Council’s 2% medium-term target on a sustained basis. Domestic inflation remains high, mostly because wages and prices in certain sectors are still adjusting to the past inflation surge with a substantial delay. But wage growth is moderating as expected, and profits are partially buffering the impact on inflation.
 

At its meeting on 30 January 2025, the Governing Council decided to lower the three key ECB interest rates by 25 basis points. In particular, the decision to lower the deposit facility rate – the rate through which the Governing Council steers the monetary policy stance – is based on its updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission.

The disinflation process is well on track. Inflation has continued to develop broadly in line with the December 2024 Eurosystem staff macroeconomic projections for the euro area and is set to return to the Governing Council’s 2% medium-term target in the course of 2025. Most measures of underlying inflation suggest that inflation will settle at around the target on a sustained basis. Domestic inflation remains high, mostly because wages and prices in certain sectors are still adjusting to the past inflation surge with a substantial delay. But wage growth is moderating as expected, and profits are partially buffering the impact on inflation.

 

At its meeting on 12 December 2024, the Governing Council decided to lower the three key ECB interest rates by 25 basis points. In particular, the decision to lower the deposit facility rate – the rate through which the Governing Council steers the monetary policy stance – was based on its updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission.

The disinflation process is well on track. According to the December 2024 Eurosystem staff macroeconomic projections for the euro area, headline inflation is expected to average 2.4% in 2024, 2.1% in 2025, 1.9% in 2026 and 2.1% in 2027 when the expanded EU Emissions Trading System becomes operational. For inflation excluding energy and food, staff project an average of 2.9% in 2024, 2.3% in 2025 and 1.9% in both 2026 and 2027.

Most measures of underlying inflation suggest that inflation will settle at around the Governing Council’s 2% medium-term target on a sustained basis. Domestic inflation has edged down but remains high, mostly because wages and prices in certain sectors are still adjusting to the past inflation surge with a substantial delay.

 

At its meeting on 17 October 2024, the Governing Council decided to lower the three key ECB interest rates by 25 basis points. In particular, the decision to lower the deposit facility rate – the rate through which the Governing Council steers the monetary policy stance – was based on its updated assessment of the inflation outlook, the dynamics of underlying inflation and the strength of monetary policy transmission. The incoming information on inflation showed that the disinflationary process is well on track. The inflation outlook was also affected by recent downside surprises in indicators of economic activity. Meanwhile, financing conditions remained restrictive.

Inflation is expected to rise in the coming months, before declining to target in the course of next year. Domestic inflation remains high, as wages are still rising at an elevated pace. At the same time, labour cost pressures are set to continue easing gradually, with profits partially buffering their impact on inflation.