Overview

• The downgrade reflects weaker industrial output, a poor construction sector and a downward revision to private consumption, according to Destatis.
• Investment fell sharply, with gross fixed capital formation down 1.4% quarter on quarter and trade offering no support as exports slipped 0.1%.
• New US tariffs of 15% on most EU goods since August 7 and ongoing policy uncertainty are weighing on German exporters and orders.
• Revised annual figures now show GDP fell 0.9% in 2023 and 0.5% in 2024, lowering the baseline for 2025.
• Public finances improved, with a preliminary H1 deficit of about €28.9 billion, or 1.3% of GDP, while S&P Global’s August PMI ticked up to 50.9.