Can Germany overhaul its economy before AfD grows stronger?

Germany's export-led economic model faces unprecedented strain just as support for the far-right Alternative for Germany (AfD) party reaches a new peak. Chinese rivals are steadily eroding the market share of major German industrial players, while persistently high energy prices, elevated labor costs and excessive red tape are adding to the structural crisis. After two years of contraction, real GDP edged up only 0.2% last year, according to the Federal Statistical Office, Destatis. Exports to China fell 9.7% in 2025, with German vehicle and part shipments plunging by a third. While there are signs the German economy is turning the corner, the government's latest forecast of 1.3% growth in 2026 is still modest compared with the pre-COVID boom years.