Germany’s Federal Statistical Office Destatis announced that Europe’s largest economy grew in the first quarter of 2024, reversing a slump from the end of the previous year. This growth is seen as a positive sign for economists who have been hopeful that Germany’s energy-intensive economy could be on the verge of a turnaround after a period of decline.
During the first three months of the year, output in Germany increased by 0.2% compared to the previous quarter, where the economy had shrunk by 0.5%. This growth was attributed to improvements in both the construction industry and exports, although household consumption did see a decline. The overall economic climate in Germany has been somewhat gloomy due to challenges such as higher energy costs, inflation, and interest rates.
In 2023, Germany experienced a slight recession with a 0.2% decrease in GDP when adjusted for price. However, there are hopes that the outlook is improving with the easing of energy costs and inflation. Analysts, such as ING bank’s Carsten Brzeski, are cautiously optimistic about the future of the German economy, noting that recent growth shows that there is potential for further expansion.
Despite these positive signs, Brzeski also warned of potential challenges ahead such as rising oil prices due to geopolitical tensions and an increase in insolvencies that could adversely affect the labor market. However, recent data shows that unemployment in Germany remained stable at 5.9% in April. Overall, the hope is that Germany’s economy is on a path towards recovery and sustained growth in the coming months.