As is well known, the German glass is often half empty, and the perceived water level has not been as low as it is today for a long time. No wonder: the narrative of a doomed economy writes itself when you study the current news situation. Growth never fully recovered after the energy price shock of 2022. The industry is losing competitiveness. Exports to the USA and China are weakening, and the tense geopolitical situation is putting additional pressure on it.
The struggle over the future of Greenland between America and the EU has not helped. Accordingly, negative news dominates. This is understandable, but also dangerous. A country that declares itself to be economically paralyzed creates exactly the kind of reluctance to invest and consume that it subsequently complains about.
A good combination
If the current economic weakness is also a question of expectations, then a key lever lies in Berlin. The necessary investment scope is available – now it must be used sensibly: investments in the future instead of cross-subsidizing social spending, structural reforms instead of bureaucratic gridlock and economic determination instead of political guerrilla warfare. When it comes to the latter in particular, there is a lot wrong. But if you look closely, you will see that there are the first concrete glimmers of hope.
The government has made a lot of progress in 2025, especially when it comes to investment promotion. The immediate investment program has been running since the summer, taxes have been reduced and depreciation has been simplified. The Germany Fund was set up to mobilize private capital. In addition, the first 50 billion euros from the infrastructure package will flow in 2026.
None of these measures are in themselves a panacea. In combination, however, they provide necessary economic stimulus that should ensure a noticeable increase in economic momentum.
In fact, there are initial signs of an impending recovery. The industry’s order books are finally filling up again: in November the industry recorded an increase of almost six percent, and even an increase of over ten percent year-on-year. Industrial production is also gaining momentum. These positive developments are now also reflected in the first sentiment indicators, which signal that companies are gradually working their way out of the low mood. It is also encouraging that the Bundesbank’s weekly activity index has returned to positive territory.
It is right to be concerned about increasingly erratic global politics. And it is just as legitimate to complain about the backlog of reforms in Germany. However, this should not obscure the fact that the German economy has probably bottomed out. The German glass will probably not overflow for a long time. But if you look more closely, you can see that the level is rising again.
The author is chief economist at DZ Bank.
