‘Surprisingly good March' helps German GDP exceed expectations
The German economy grew by a surprising pace of 0.4% in the first quarter, according to revised data from the German statistics office. That was double the growth initially estimated.
The Federal Statistical Office had reported at the end of last month that the economy expanded by 0.2% in the January-March period compared with the previous quarter. The head of the office, Ruth Brandt, said that "the surprisingly good economic development seen in March" led to the revision.
The last time Germany saw stronger growth was in the third quarter of 2022, when gross domestic product expanded by 0.6%. Germany has struggled to generate significant growth for years, and the economy shrank in each of the last two years. In last year's fourth quarter, it contracted by 0.2%.
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 US President Donald Trump's tariffs and trade threats, but said a huge infrastructure investment package put together by Merz's coalition offers opportunities for 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, fuelled 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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