German Economy Sees Modest Growth in Early 2024

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Germany’s economy experienced slight growth in the first quarter of 2024, driven by increased activity in the construction sector and a rise in exports, according to government data released on Friday.

This aligns with a preliminary estimate of 0.2% quarter-on-quarter growth reported last month. “After GDP fell at the end of 2023, the German economy started 2024 on a positive note,” said Ruth Brand, president of the Federal Statistical Office, in a statement.

Construction and Exports Lead Growth

Following a weak second half of 2023, investments in the construction sector surged by 2.7% in the first quarter. This uptick, coupled with positive foreign trade, contributed to the modest economic growth observed in early 2024.

Despite easing inflation, private household spending remained sluggish, declining by 0.4% compared to the previous quarter, according to Destatis.

Future Outlook and Challenges

Looking ahead, hopes for Europe’s largest economy rest on a potential increase in private consumption, supported by higher wages and lower inflation. The country’s central bank anticipates modest growth continuing into the second quarter.

However, analysts and investors remain cautious, noting that the economy faces significant challenges and is unlikely to experience a rapid recovery this year.

In 2023, Germany experienced a slight recession with a price-adjusted decline of 0.2%. The export-oriented economy was impacted by a global economic slowdown, temporarily high energy prices, and rapidly rising interest rates.