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.
Global markets remained defensive as stalled U.S.–Iran negotiations and persistent Middle East tensions continued to fuel inflation concerns and strengthen the dollar.
Global markets remained under pressure as persistent inflation concerns and stalled U.S.–Iran diplomacy reinforced expectations for tighter monetary policy.
Detail Yields Rise While Metals Trade Mixed (05.13.2026)Global markets turned cautious as escalating U.S.–Iran tensions and stronger U.S. inflation data reinforced expectations for higher interest rates.
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