German economy avoids recession, bolstered by construction and export performance

Posted on May 14, 2024   |  

Germany managed to avoid a recession in the early months of the year, achieving growth driven by both the construction sector and exports.

During the first quarter, the economy experienced a modest increase, with gross domestic product (GDP) expanding by 0.2% compared to the previous three-month period in adjusted terms.

In the previous year, Germany, as the largest economy in Europe, faced challenges compared to its eurozone counterparts due to factors such as elevated energy costs, subdued global orders, and historically high interest rates.

Although there are expectations for a decline in inflation, the outlook for German economic growth remains relatively subdued. 

The government recently adjusted its growth forecast for the year to 0.3%, up from the previously projected 0.2%.

Private consumption is anticipated to contribute positively to growth, supported by projected increases in real wages amidst a resilient labor market.

March saw an unexpected increase in German retail sales, signaling a potential rebound in consumption towards the end of the quarter and offering hope for the overall economy.