German economy contracts by 0.1% in second quarter

The German economy shrank slightly by 0.1% in the second quarter of 2025 from the previous three months, flash data from statistics agency Destatis showed Wednesday.

The figure, which is adjusted for price, calendar and seasonal variations, aligned with the expectations of analysts polled by Reuters and marked a sharp slowdown compared to a revised 0.3% expansion in the first quarter.

Investment in machinery and equipment, as well as construction, were lower in the second quarter than in the previous three-month period, while private and government consumption expenditures increased, Destatis data signaled.

U.S. tariffs and their impact have been a top concern for European economies. U.S. president Donald Trump's so-called reciprocal tariffs initially came into effect in April as the second quarter kicked off.

The duties were then however temporarily reduced, with the last few months plagued by much uncertainty as negotiations for trade agreement were underway. Some higher sectoral tariffs, including on autos and steel and aluminum, have also been in effect.

The European Union over the weekend agreed to a trade framework with the U.S., which includes 15% tariffs being imposed on the bloc. Some goods are set to be exempt, and levies on autos have been reduced to the baseline level.

Later on Wednesday, a preliminary reading of the euro zone's gross domestic product is expected. According to a Reuters poll, economists are expecting growth to have flatlined.

In the first three months of 2025, the euro zone economy had grown 0.6%.

This is a breaking news story, please check back for updates.