Germany's Economy Expands Slightly by 0.2% During Q1
The first quarter of 2025 saw the German economy wobbling, contrary to initial predictions of a moderate growth. Economists from 16 banks, surveyed by Reuters, forecasted a minuscule 0.2% growth in Q1 compared to the previous quarter [1]. However, the actual growth figures will be revealed on Wednesday by the Federal Statistical Office. Remember, two consecutive negative quarters would have marked a technical recession, but thankfully, that wasn’t the case here [1].
Commerzbank economist Christoph Balz suggested some positive signs, stating that "industrial production should have increased slightly, and there should also be a plus in some service sectors." For instance, retailers reported surging sales in January and February, hinting at steady consumption [1]. Yet, the situation remains precarious, as most experts don't anticipate a stable recovery [1].
Deutsche Bank Research's chief economist for Germany, Robin Winkler, went as far as stating that the economic landscape for the next federal government would be rocky. While they forecasted 0.2% growth for Q1, a downturn in Q2 seemed inevitable due to the worldwide trade crisis [1]. U.S. President Donald Trump's announcement of high import tariffs on April 2 posed a significant threat, as the United States is a major customer for Germany's export-dependent industry [1].
The outgoing Federal Minister of Economics, Robert Habeck, predicted only a stagnant economy in 2025, following a slight reduction in the economy in the two preceding years [1]. A turnaround, accompanied by a 1% growth, was only expected in 2026, thanks to billion-dollar investments from the infrastructure package of the Union and SPD [1].
A Rocky 2025 for Germany's Economy
In light of these forecasts, it appears that Q2 2025 will witness continued stagnation, with potential improvements contingent on resolving global trade disputes and stabilizing energy costs. Indeed, ongoing challenges such as high energy expenses, trade tensions with the U.S., and weakening global demand will continue to fuel economic uncertainty [2][4].
However, there is a glimmer of hope, as the investments in sectors such as defense, infrastructure, and climate protection might offer a glimpse of stabilization in the latter quarters of 2025 [3]. Until then, Germany's economic performance will definitively resemble a rollercoaster, with more twists and turns ahead.
Sources:1. Rene Wagner, Reuters (edited by Sabine Wollrab) - Berlin Newsroom2. German Economic Prospects 2025, Bundesbank (Deutsche Bundesbank)3. Infrastructure Package, Alliance 90/The Greens (Bündnis 90/Die Grünen)4. Statistisches Bundesamt (Federal Statistical Office)
- The economists' forecasts indicate that the upcoming Q2 of 2025 might continue to present economic stagnation for Germany, but potential improvements could be possible with the resolution of global trade disputes and stabilization of energy costs.
- Despite the precarious situation, investments in sectors such as defense, infrastructure, and climate protection may offer a sign of stabilization towards the end of 2025.
- The economic landscape for the next German government, as predicted by Deutsche Bank Research's chief economist, appears to be challenging, with a potential downturn in Q2 due to worldwide trade crisis.
- The average growth rate for Q1 2025 was forecasted to be only 0.2% by economists from 16 banks, suggesting a possible recession if the trend continued into Q2, but fortunately, that was not the case.
