BERLIN (DPA, CONVERSEER) – The German economy is likely to grow only slightly in the first quarter of the year, the country’s central bank predicted in its monthly report for January on Thursday.
Germany narrowly avoided a third consecutive year of recession in 2025, with preliminary figures from the Federal Statistical Office showing gross domestic product (GDP) inching up by 0.2%.
Economists are expecting activity to pick up this year, with the International Monetary Fund (IMF) revising its estimate for 2026 growth to 1.1% earlier this month.
Sharp increases in state expenditure on transport infrastructure and defence are expected to provide a boost to Europe’s largest economy by the end of the year, once the funds pledged by Chancellor Friedrich Merz’s administration take effect.
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“The easing of fiscal policy is likely to provide stronger impetus over the remainder of the year,” the Bundesbank said.
German industry advanced towards the end of 2025 despite the impact of higher US tariffs, and consumer expenditure has also picked up, the bank said.
However, companies have recently reported more pessimistic expectations, suggesting that “economic output is likely to grow only moderately in the first quarter of the year.”
