BERLIN – Official data released on Friday revealed that Europe’s largest economy, Germany, posted a growth of 0.4% in the first quarter, driven by unexpectedly strong exports and manufacturing. This growth rate was twice as high as initially projected.
The Federal Statistical Office initially reported at the end of last month that the economy grew by 0.2% from January to March compared with the preceding quarter. The office’s head, Ruth Brandt, noted that “the surprisingly good economic development seen in March” prompted the adjustment.
The last instance of stronger growth in Germany occurred in the third quarter of 2022, with a gross domestic product increase of 0.6%. Germany has faced challenges in achieving substantial growth for several years; the economy experienced contractions over the past two years, including a 0.2% decline in last year’s fourth quarter.
In its first forecast since new Chancellor Friedrich Merz’s government took office earlier this month, the government’s panel of independent economic advisers predicted on Wednesday that GDP will stagnate this year and grow by 1% next year.
It pointed to headwinds from U.S. President Donald Trump’s tariffs and trade threats, but said a huge infrastructure investment package put together by Merz’s coalition offers opportunities for an improvement next year.
Carsten Brzeski, global chief of macro at ING bank, said the improved first-quarter showing looks set to be “a positive one-off” at least in the short term, fueled by businesses trying to get ahead of Trump’s tariffs.
“As a result of the announced tariffs and in anticipation of ‘Liberation Day,’ German industrial production and exports surged in March,” Brzeski said in a research note.
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