The German economy stagnated overall in the 1st half of 2025; German gross domestic product fell by 0.3% in the second quarter, as it had risen in the first quarter. Special effects (bringing forward production and exports to the first quarter due to expected US tariffs and mild winter weather) played a role in this, and the new government only took up its work in May and the economy initially waited for its reform plans. After the coalition parties had already greatly expanded the debt possibilities for the infrastructure and defence sectors before the government took office, it has now also introduced the first measures to improve the location conditions. This should ease the previous reluctance of investors and provide growth impetus in the future. Private consumption has been supporting the economy for some time. However, further dampening influences come from the export side, because despite the “tariff deal” with the USA, tariffs on US exports are now higher than in the pre-Trump era. Overall, however, the positive impulses will outweigh the negative impulses in the future, so that a gradual revival of the economy is to be expected for the rest of this year, which will then continue to intensify next year. The HWWI continues to expect economic growth of 1/4 % on average for 2025 and 1 1/2 % for 2026.