Economic cycle

The business cycle (Konjunkturzyklus) describes the regular fluctuations in economic activity between growth and contraction.

The 4 phases:

1. Upswing (expansion): GDP grows, companies invest, unemployment falls, wages rise

2. Boom (peak): the economy at its high point, full employment. Danger: overheating, inflation, speculative bubbles

3. Downswing (recession): GDP shrinks (technically: 2 quarters in a row), layoffs, consumers hold back

4. Trough (depression): the low point. Recovery begins when interest rates fall and the state takes countermeasures

Germany: cycles since 1950:

• Typical duration: 7–10 years
• 8 recessions in 75 years (on average every 9 years)
• Most severe: 2009 (−5.7% GDP, financial crisis)
• Shortest: 2020 (coronavirus, 1 quarter, the fastest recovery in history)

Where does Germany stand in 2025/2026?

• Prolonged stagnation: 3 years without significant growth (2023–2025)
• ifo Business Climate Index: 86.4 points (March 2026) – below the neutral threshold
• Burdens: high energy prices, US tariffs, geopolitical tensions
• Paradox: the DAX at an all-time high although the German economy is weak – because DAX companies generate 80% of their revenue abroad