Germany’s economy grew by 0.2% in the first quarter of 2025, according to preliminary figures released Friday, matching market forecasts. This modest rebound follows a 0.2% contraction in the previous quarter and signals a fragile but welcome return to growth for Europe’s largest economy.
The upturn was supported by easing inflation and lower borrowing costs, which helped lift domestic demand and business investment. Consumer and business sentiment also improved, supported by the resolution of coalition talks and the formation of a stable federal government earlier in the year. The political clarity provided a tailwind, offering reassurance to markets amid broader uncertainty.
Still, underlying challenges persist. Compared to a year ago, Germany’s gross domestic product (GDP) declined by 0.2%. This marks the seventh consecutive quarter of year-on-year contraction, highlighting the enduring impact of structural weaknesses and global economic pressures. Trade tensions, particularly stemming from shifting U.S. tariff policy, continue to weigh on sentiment and export performance.
Economists caution that while the quarterly growth is a step forward, it does not yet signal a strong or sustained recovery. Germany will need continued policy support and a more stable global backdrop to build on this early momentum.
The U.S. dollar gained traction Monday after the U.S. and China agreed to pause retaliatory tariffs for 90 days, prompting a gap lower in EUR/USD to 1.1064. Meanwhile, Moody’s downgraded the U.S. credit rating, citing fiscal concerns, sparking risk aversion and supporting safe-haven assets like gold and the yen.
Detail
Dollar Gains and Gold Slips Amid Risk Appetite (19 - 23 May)The U.S. dollar held near 100.8, heading for a 0.6% weekly gain as weak data increased Fed cut bets. The euro rebounded to $1.12 on firm inflation and ECB cut hopes. The pound hovered near $1.32 as UK jobs data raised BoE cut odds. The yen rose toward 145 despite Japan’s 0.2% GDP drop, with the BoJ staying cautious.
Detail Gold and Silver Diverge as Risk Appetite Returns (05.16.2025)The euro advanced near $1.12 as the dollar softened, even as ECB rate cut bets remained firmly priced in. The yen strengthened for a fourth straight day despite a contraction in Japan’s Q1 GDP.
DetailThen Join Our Telegram Channel and Subscribe Our Trading Signals Newsletter for Free!
Join Us On Telegram!
