Germany’s economy expanded by 0.4% in the first quarter of 2025, marking its strongest quarterly growth since late 2022, according to revised data from the Federal Statistical Office.
The rebound, driven by surging exports and household consumption, offers cautious optimism for Europe’s largest economy amid ongoing political instability and global trade tensions.
The upward revision reflects stronger-than-anticipated manufacturing output and export growth in March, with exports rising 3.2% quarter-on-quarter. Statistics Office President Ruth Brand attributed this to US importers front-loading purchases ahead of expected tariffs.
Household consumption also grew robustly at 0.5%, buoyed by easing inflation and improved wage growth. However, government spending fell 0.3%, constrained by a provisional budget enacted after the collapse of Chancellor Olaf Scholz’s coalition in November 2024.
New Finance Minister Lars Klingbeil has prioritised austerity measures, demanding ministries identify savings despite plans for a €500 billion infrastructure fund. While tariffs pose risks for Germany’s export-reliant economy, the Q1 surge suggests short-term resilience.
Analysts warn the export boost may be temporary, with the European Commission forecasting stagnation for 2025 due to persistent trade tensions and weak global demand. The government’s ability to finalise its 2025–26 budgets and implement structural reforms will be critical to sustaining momentum.
