Germany’s economy, the largest in Europe, experienced growth in the first quarter of 2024, reversing a decline at the end of the previous year. The growth could signal a turnaround for the country’s energy-intensive economy. Output increased by 0.2% from January to March compared to the previous three months when the economy had contracted by 0.5%.
Despite this positive news, there have been concerns about the German economy due to factors such as high energy costs, inflation, and interest rates. In 2023, Germany experienced a slight recession with a 0.2% decline in GDP adjusted for price. However, with energy costs and inflation easing, the outlook for the German economy appears to be improving.
ING bank analysts have expressed optimism about the German economy, with Carsten Brzeski noting that the recent upturn indicates that the economy is capable of growth. While there are concerns about potential negative impacts from factors such as rising oil prices due to conflicts in the Middle East, Brzeski also highlighted the stability of the labor market, with unemployment remaining at 5.9% in April. Despite some challenges, there is a sense of cautious optimism surrounding the German economy.
