Brandenburg Gate in Berlin, Germany

Germany GDP Q1 2024

Germany: Economy bounces back in the first quarter

According to a preliminary estimate, the German economy rebounded in the three months to March, growing 0.2% on a seasonally adjusted quarter-on-quarter basis. The upturn came in above Q4’s downwardly revised 0.5% contraction and beat market expectations. Q1’s result was the strongest since Q1 2023.

On an annual basis, economic activity declined 0.9% in Q1 (Q4 2023: -0.4% yoy), the sharpest drop since Q1 2021.

Germany’s quarterly upturn largely reflected improvements in exports of goods and services, and in fixed investment in construction. In contrast, household spending deteriorated in the quarter, according to the statistical office.

A complete breakdown will be released on 24 May.

Our panelists expect sequential growth to slow in Q2, but then to pick up in subsequent quarters. Over 2024 as a whole, the economy should post a shallow rebound from 2023’s contraction, which was the worst in 14 years barring 2020’s pandemic-induced downturn. That said, our Consensus is for Germany to be G7’s worst performer in 2024, and to fall short of the Euro area average. Rebounds in private and public spending will only partly offset a sharper drop in fixed investment amid still-tight financial conditions. Meanwhile, persistent weakness in external demand will weigh on exports.

EIU analysts also weighed in:

“We continue to expect a gradual and modest economic recovery in 2024, amid ongoing cyclical and structural headwinds. [However], economic activity on the whole will remain weak throughout 2024.”

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