Bundesbank President Joachim Nagel announced that the German economy is slowly recovering after a weak two years, driven by increasing private consumption and exports in the second half of the year. Nagel highlighted that rising wages, declining inflation, and a stable labor market are benefiting private households.
In the first quarter of this year, Germany saw minimal growth of 0.25%, mainly due to exports and increased construction investment. For the entire year of 2024, the Bundesbank anticipates economic output to grow by 0.3%, a slight decrease from the initial forecast of 0.4% in December. Looking ahead, the central bank’s economists project stronger growth of 1.1% in 2025 and 1.4% in 2026.
Despite a gradual decrease, the rate of inflation in Germany remains at 2.8% for the current year and is expected to be 2.7% in 2025 based on the Harmonized Index of Consumer Prices (HICP). While energy and food prices are easing, inflation persists in services due to significant wage increases and cost pressures.
The Bundesbank’s inflation forecast for 2026 remains at 2.2%. Despite challenges, the German economy is showing signs of resilience with positive trends expected to continue in the coming years.