Anticipated Reduction in Economic Expansion in Berlin according to Experts
Berlin, the vibrant heart of Germany, is set to grow its economy by around 1% in 2025, outperforming the national average despite the challenging global and national economic climate. This optimistic growth outlook is largely attributed to the city's dynamic ICT (information and communications technology) sector and a substantial public services sector.
According to the Office for Statistics Berlin-Brandenburg, the value of all goods and services produced in Berlin in 2024 amounted to €207.1 billion at constant prices, representing 4.8% of Germany's total GDP. However, the growth in Berlin's GDP in 2024 was lower than the revised forecast for Berlin's GDP growth in 2025 by the Investment Bank Berlin (IBB).
The IBB, in its revised forecast, now expects a 1% increase in Berlin's GDP growth for 2025, a figure that surpasses the national average predicted by the German Institute for Economic Research. In December, the IBB had predicted a 1.5% increase in Berlin's GDP growth for 2025.
Several key factors contribute to Berlin's above-average growth. Robust fiscal spending, particularly Germany's 2025 federal budget that includes increased infrastructure and defense spending, provides a substantial public investment of around €19 billion, benefiting regions like Berlin. This fiscal boost counters headwinds from weak private consumption and global trade tensions.
Berlin's ICT industry is another driving force, expanding and helping to maintain economic activity even as traditional manufacturing regions face export challenges due to tariffs and global tensions. The city's large public services sector also provides economic stability amid uncertainty and slower growth in export-dependent southern states of Germany.
Geographical impact of investments, such as new production facilities and rail projects, further supports jobs and growth in Berlin. The increased federal spending on defense and infrastructure benefits the city, contributing to its optimistic growth outlook.
In contrast, other major German industrial and export-oriented regions face setbacks due to higher US tariffs that pressure manufacturing output and exports, leading to stagnation in the broader national economy. Berlin’s focus on ICT and public services makes it less vulnerable to these external shocks, allowing it to outperform in 2025.
In uncertain times, the interplay between public support and entrepreneurial initiative is crucial, according to Hinrich Holm, the CEO of the IBB. A cautious development on the job market is noticeable in Berlin, he added. Despite the global tensions and national stagnation, Berlin continues to grow above average, as stated by Holm.
References:
[1] German Federal Government (2025). Federal Budget. Available at: https://www.bundesregierung.de/breg-en/budget/2025/1846746
[2] Investment Bank Berlin (IBB) (2025). Berlin Economic Outlook. Available at: https://www.ibb-berlin.de/en/research-and-analysis/economic-research/berlin-economic-outlook
[3] German Institute for Economic Research (DIW) (2025). German Economic Outlook. Available at: https://www.diw.de/en/diw_01.c.576100.de/german-economic-outlook.html
[4] The Financial Times (2025). Germany's Economy Faces Headwinds from US Tariffs. Available at: https://www.ft.com/content/b4c17b4a-e0e6-441d-a9b5-e9e93c955e0d
Berlin's economic growth of 1% in 2025, as predicted by the Investment Bank Berlin (IBB), is set to surpass the national average, demonstrating the city's resilience amid challenging global and national economic conditions. This growth is largely attributed to the city's dynamic finance sector, which benefits from increased public investments, a robust federal budget, and an expanding ICT industry.
