German Economy Escapes Recession with Modest 0.2% Growth in Q1

Preliminary data from Germany’s Federal Statistical Office revealed that the country’s GDP grew by 0.2% in the first quarter of 2025, aligning with analysts’ expectations and narrowly avoiding a technical recession after a 0.2% contraction in Q4 2024. This marks the first positive quarterly growth after two consecutive periods of economic decline

The uptick was primarily supported by increased household consumption and corporate investment in fixed assets, signaling a cautious recovery in domestic demand despite persistent global trade uncertainties. The data also reflects a rise in consumer appetite for goods and services, along with new industrial projects that boosted private sector activity

Tariff Tensions Cloud Outlook

Despite this modest rebound, economists remain wary of the impact of U.S. trade tariffs on European imports, particularly those targeting key German exports. Such measures could hamper industrial output and complicate corporate investment strategies. Should these tariffs persist, Germany risks slipping into a third consecutive year of economic contraction—an unprecedented scenario in the post-war era

As the second quarter unfolds, markets and investors will closely monitor whether this early growth can be sustained, especially as several economic institutions have revised Germany’s full-year growth forecast to below 0.2%