Germany Shows Economic Recovery Signs Amid Calls for Pragmatic Energy Partnerships

Germany's economy in the fourth quarter of 2025 displayed modest growth, with GDP increasing by 0.2% quarter-on-quarter, marking a slight recovery after a stagnant third quarter. The annual GDP also rose by 0.2% compared to the previous year. This growth was mainly driven by a 0.8% rise in industrial production, particularly in investment goods, though foreign trade made no significant contribution. Inflation fell to 1.8% in December 2025, the first time below 2% since autumn 2024, helped by declining energy prices and slower food price growth, despite ongoing service price increases.

However, not all indicators were positive. Retail sales declined by 0.3% in November, with mixed performances across sectors. The labor market remained largely stagnant; unemployment increased slightly by 3,000 in December, although overall employment levels held steady. Consumer sentiment and economic forecasts still face uncertainties due to these mixed signals.

Against this economic backdrop, Andreas Lenz, Economic and Energy Policy Spokesman for the Union faction in the Bundestag, stressed the critical need for pragmatism and strategic partnerships in Germany's energy and economic policy. Ahead of Chancellor Friedrich Merz's planned trip to the Gulf region, Lenz emphasized that Germany must focus on realpolitik to effectively reduce energy dependency. He noted, "We need partnerships. We need realpolitik and pragmatism. While we should point out issues, the moral high ground can often be counterproductive."

The Chancellor’s visit is set to enhance cooperation in vital industries such as chemicals, automotive, and machinery manufacturing, aiming to diversify Germany’s energy sources and secure stable supply chains. These strategic moves come in response to evolving geopolitical challenges that threaten energy supply stability.

In summary, while Germany's economy is cautiously recovering, the government advocates for pragmatic international partnerships to strengthen economic resilience and energy security as the nation navigates uncertain global conditions.