German economy edges up in Q1 but U.S. tariffs raise recession fears
BERLIN, April 30 (Xinhua) -- Germany's economy recorded modest growth in the first quarter of 2025, offering a brief reprieve after two consecutive years of contraction. However, economists caution that the recovery could stall as early as this summer due to escalating trade tensions with the United States.
Preliminary figures released Wednesday by the Federal Statistical Office showed that Germany's gross domestic product (GDP) grew by 0.2 percent compared to the previous quarter, following a 0.2-percent contraction in the final quarter of 2024.
The agency also noted a rise in investment and household spending during the first three months of the year. Despite this quarterly uptick, the economy contracted by 0.4 percent year-on-year after adjusting for price changes, highlighting ongoing challenges for Europe's largest economy.
Timo Wollmershaeuser, head of forecasts at the Munich-based ifo Institute, noted that recent tariff increases by the United States temporarily boosted German exports in early 2025, as American importers rushed to make purchases ahead of the new levies.
However, he warned that escalating trade tensions and uncertainties are clouding the outlook for industrial production and business sentiment in Germany. "The noticeable increase in tariffs on imports from the European Union that came into force in April, along with the threat of further tariff increases, weighed on the future course of German economy," he added.
The ifo Institute now predicts that Germany's economy could slip back into contraction as early as the summer.
Last week, the German government sharply downgraded its 2025 growth forecast to zero, citing the adverse effects of U.S. trade policies under President Donald Trump. If realized, this would mark the third consecutive year without economic growth.
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