A late Happy New Year! What a time to be alive! Before we jump into the mess created already three weeks into the new year, let’s wrap up 2025:
According to Destatis, German GDP grew by 0.2% in 2025; assuming that the Eurozone’s GDP has indeed grown by around 1.2% in the same time-frame, this result is more than abysmal. Overall Germany’s GDP is actually stagnating since 2019.
The German DAX price index (for an explanation, why I prefer this index, cf. here) started at 8,837 points on 1 December and then displayed a veritable year-end-rally, ending with 9,175 points on 30 December 2025 – thus gaining 338 points in the course of the month.
German industrial orders – after decreasing by -2.9% (MoM, even -3,4% YoY) in July and by -0.8% (MoM, but +1.5% YoY) in August, first increased by +1.1% (MoM, but -4.3% YoY) in September and +1.5% (MoM, but -0.7% YoY) in October before „exploding“ to +5.6% (MoM, even +10.5% YoY!) in November 2025. However, this inscrease is mainly driven by large orders, Destatis: „When large-scale orders are excluded, new orders were 0.7% higher than in the previous month. The less volatile three-month on three-month comparison showed that new orders in the period from September 2025 to November 2025 were 4.0% higher than in the previous three months. When large-scale orders are excluded, new orders were up 2.1% in the same period.„
Also, Germany’s industrial production further continued to increase, albeit on a smaller scale: after gaining +1.3% (MoM, +1.50% YoY) in July, then crashing by a catastrophic -4.3% (MoM, still -3.9% YoY) in August, production grew by +1.3% (MoM, aber -1.0% YoY) in September, by another 1.8% (MoM, still 0.8% YoY) in October and by +0.8% (MoM, also 0.8% YoY) in November 2025.
There against, German exports, decreased: after receding by -0.6% (MoM, but +1.4% YoY) in July and another -0.5% (MoM, even -0.7% YoY) in August, exports gained +1.4% (MoM, even 2.0% YoY) in September and another +0.1% (MoM, even +4.2% YoY) in October before again decreasing by -2.5% (MoM, still -0.8% YoY) in November 2025.
For other German KPI’s, I refer you, first, to the usual „Destatis Deutschland-Dashboard“ (here) and the „Data Commons (Germany)“ (here), but also to the new IWH Forecasting Dashboard and the DATEV Mittelstandsindex.
The German Target 2 balance lost around 26bn between October and December 2025 and ended at Euro 1,023bn. The German inflation-rate slowed down a bit: starting from its peak of 10.4% in October 2022, the rate decreased to finally 1.6% in September 2024 but has re-increased to again to 2.6% in December 2024, and since then taken a zig-zag course, resulting in 2.2% in August, 2.4% in September and to 2.3% in October where it remained in November, before further decreasing to 1.8% in December 2025 (each YoY). The inflation rate for 2025 is 2.2%.
The German Labor market starts to feel the winter-blues: Unemployment rose to 6.3% in July and to 6.4% in August, before decreasing to 6.3% again in September, to 6.2% in October and to 6.1% in November before increasing to 6.2% in December 2025 (all MoM). German insolvency filings further increased: After increasing (moderately) by 19.2% in July, another 11.6% in August, 10.4% in September, by a rather moderate 6.5% in October and another moderate 5.7% in November, filings increased again by +15.2% in December 2025, so much so that Destatis will stop publishing these provisional current figures alltogether starting in January. Hence, the numbers I can present will be three-months behind in the future (all YoY; cf. my most recent comment, here, in German).
The leading German sentiment indicators were de-synced in December: The German (Industrial) Purchasing Managers’ Index (PMI) lost another 1.2 points to 47.0 points in December 2025. There against, the ZEW Indicator for business expectations gained over 7 points and rose to 45.8 points in December 2025. The ifo Business Climate Index, though, lost another 0.4 points and fell to 87.6 points in December 2025. The GfK-consumer index increased by 0.7 points to -23.4 points in December 2025.
To sum up: As the year 2025 drew a close, „hard“ as well as „soft“ (aka sentiment indices) indicators presented a mixed bag which makes it harder to discern some overall picture behind the mere figures. Looking at the overall decreasing exports (in the first 11 months of the year, exports to the US decreased by over 9% alone!) while mainly large orders „carried“ the overall orders, it is fair to assume that the German economy becomes more reliant on it’s internal market, shedding it’s export-culture. But that is only possible due to the rearmement of Germany. The latter is not really a fruit-yielding investment. Hence, the small growth we see in the German economy seems mainly due to arms and not to a sound economic situation.
Last year’s December issue conluded with the following words:
„A year ago I predicted that 2024 will put an end to the illusion of Germany’s prosperity as narrated in the 2010’s (cf. here). And – despite the concrete figures not materialising as bad as I thought – how right I was! Well, to be fair, it did not need real witchcraft to read this into the glas bowl. And it is not very difficult to predict that the German decline will continue through 2025. While the German population has probably understood the message, German politicians, in the run-up to the Bundestagswahl on 23 February 2025 still outdo one another with promises how to increase welfare – for them, the illusion is still alive and kicking it seems.„
Was I right or was I right?
And it is more than conceivable that all the „glossy“ forecasts by the same pundits who were wrong the last time will again be squashed by reality in 2026. But we’ll come to this in the next month’s review.