Germany – Q1 growth stronger than expected

This is a pleasant surprise: The Federal Statistical Office today raised its estimate for German economic growth in the first quarter compared to the final quarter of 2024 from 0.2% to 0.4%. The office cited surprisingly strong economic activity in March as the reason for this. The details published today show that most demand components have increased, with exports standing out with a 3.2% growth rate. Only government consumption expenditure fell, probably due to the federal government's provisional budget management, and inventories also made a negative contribution.

Special factors are likely to have played a role in the fairly strong growth in the first quarter: Easter was relatively late this year, meaning that the Easter holidays had less of a negative impact on economic activity in March than is usually the case. In addition, the strong increase in exports could be an indication that many companies brought forward deliveries to the US in view of the impending US tariffs. Furthermore, the Federal Statistical Office appears to be experiencing problems with seasonal adjustment at present. Seasonally adjusted real GDP has risen in the first and third quarters of each of the past three years and fallen in the second and fourth quarters. This “seasonal effect” therefore probably contributed to the increase in the first quarter. All of this suggests that economic output is set to fall again slightly in the second quarter. However, this does not change the fact that the starting point for this year has improved.

For full text see attached PDF-Version.