German Economy Records 0.3% Growth in the First Quarter

SadaNews - The German Federal Statistical Office announced yesterday evening, Friday, that the economy grew by 0.3 percent in the first quarter of 2026 compared to the previous quarter, confirming its preliminary reading.

Ruth Brand, the head of the statistical office, stated that exports saw a notable increase at the beginning of the year, contributing to Germany's economic performance, according to "Reuters".

Total exports of goods and services rose by 3.3 percent after a decline in the last quarter of 2025, while imports recorded a slight increase of 0.1 percent on a quarterly basis. Government spending increased by 1.1 percent, while consumer spending remained unchanged, and investment decreased by 1.5 percent.

In a related context, a survey published on Friday showed an unexpected improvement in German business sentiment during May, although economists warned that the growth outlook for Europe's largest economy remains fragile.

The Ifo Institute announced that the business climate index rose to 84.9 points in May compared to 84.5 points (revised) in April, surpassing analysts' expectations which indicated a decline to 84.2 points.

Clemens Fuest, president of the institute, stated that "business sentiment in Germany has improved slightly after the decline in March and April," noting improvements in the index across most sectors except for construction.

Despite this improvement, analysts confirmed that sentiment remains at low levels, and future outlooks are still bleak in the short term.

Alexander Krüger, chief economist at Hauck Aufhäuser Lampe, said that "the sentiment remains very weak," adding that expectations are still negative for both the current and future situations.

This limited improvement comes against the backdrop of Germany’s economy growing by 0.3 percent in the first quarter of 2026. Fuest stated, "The German economy is experiencing temporary stability, but the situation remains fragile."

Jörg Krämer, chief economist at Commerzbank, predicted the possibility of economic contraction during the second quarter, while the Ifo Institute noted a slight improvement in expectations for the coming months, as the expectations index rose to 83.8 points from 83.5 points.

Carsten Brzeski, head of macroeconomics at ING, stated that the mix of geopolitical risks and potential financial stimulus creates a complex economic picture, adding that this mix could protect the German economy from recession but does not guarantee avoidance of a slowdown.