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The poor economic development in Germany has different effects in the federal states. After Calculations by the ifo Institute rose the Economic performancei.e. the total value of all goods and services produced, in half of the federal states in the third quarter of 2025. In the other federal states, however, it declined.
The decline was greatest in Saarland at minus 0.6 percent. In Rhineland-Palatinate and Schleswig-Holstein, economic output fell by 0.4 percent each.
“The industry is still in crisis, and the structural change is putting more strain on some federal states than others,” said ifo economic expert Robert Lehmann. “In some federal states, however, increases in service providers are offsetting the economic weakness in industry.”
Growth greatest in Hamburg and Bavaria
This is how the economy recently grew Hamburg and Bavaria strongest, where they are compared to previous quarter increased by 0.6 percent and 0.5 percent. The increase was somewhat weaker in Lower Saxony at 0.2 percent and Saxony at 0.1 percent. Economic output also increased slightly by 0.2 percent in Baden-Württemberg.
Even though the economy grew slightly in the third quarter, the ifo Institute for Bavaria and Baden-Württemberg expects that Business will probably decline in 2025 as a whole. The main reason for this is the tariffs imposed by the US government, which place an additional burden on the already struggling industry, said Lehmann.
The situation is different in Berlin, Mecklenburg-Western Pomerania and Bremen: There, the ifo Institute assumes that the economy will grow throughout the year.
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