FRANKFURT, Germany, Jan 15, 2026 (BSS/AFP) - Germany's economy expanded by 0.2 percent in 2025, returning to growth after two years of recession, official data showed Thursday, despite challenges ranging from the US tariff blitz to weak demand in China.

The growth was mainly due to increased spending by private households and by the government, Ruth Brand, head of the statistics agency Destatis, said in a statement.

The performance of Europe's biggest economy remained subdued however due to a decline in exports, she said.

"Germany's export business faced strong headwinds owing to higher US tariffs, the appreciation of the euro and increased competition from China," Brand said.

Investment also remained weak last year, and fell in the construction and machinery manufacturing industries, according to the provisional data released by Destatis.

For the final quarter of 2025, the agency estimated that the economy grew 0.2 percent from the third quarter.

Battered by an energy shock triggered by the Ukraine war, a manufacturing slump, US tariffs and weakening demand in the key Chinese market, the world's third-biggest economy shrank in both 2023 and 2024.

A return to growth could offer some relief to Chancellor Friedrich Merz, who took power last May vowing to revive the economy but has faced mounting criticism that efforts are moving too slowly.