At the start of the year, the German economy recorded moderate growth. Particularly, investments in construction and rising export figures contributed to economic strengthening. Germany's Gross Domestic Product (GDP) increased by 0.2 % from January to March compared to the previous quarter, as confirmed by the Federal Statistical Office, thus supporting earlier estimates from the end of April.
“After GDP had declined at the end of 2023, the German economy started 2024 on a positive note”, said Ruth Brand, President of the Federal Statistical Office. In the fourth quarter of 2023, the German economy had shrunk by 0.5 %. While exports rose by 1.1 % and construction investments increased by 2.7 %, private consumption dampened despite waning inflation at the start of the year. Consumer spending fell by 0.4 % compared to the previous quarter.
“Although the development of real wages has stabilized and significant increases in purchasing power are expected for the current year, Germans are keeping their wallets closed”, explains Sebastian Dullien, Scientific Director of the trade union-related Institute for Macroeconomics and Economic Research (IMK). In its spring forecast, the federal government expects a gradual recovery of the German economy over the course of 2024. It forecasts GDP growth of 0.3 % for 2024 and a further increase of 1.0 % in 2025.
