Preliminary data published by the Federal Statistical Office (Destatis) showed that in the 1st quarter, GDP grew by 0.2% after declining by 0.5% in the 4th quarter (revised from -0.3%). Economists had expected the economy to expand by 0.1%. Destatis said that compared with the previous quarter, the modest growth was due to an increase in gross fixed capital formation in construction and in exports. By contrast, there was a decline in household final consumption expenditure.
In annual terms, GDP declined by 0.2% in the 1st quarter after a similar drop in the 4th quarter. The latest change coincided with economists' forecasts. However, the economy entered a technical recession for the first time since 2020-21.
Meanwhile, the latest calculations show that economic performance in 2023 as a whole declined by a price adjusted 0.2% (previously: -0.3%), and economic growth stagnated after adjustment for price and calendar effects (revised: 0.0%, previously: -0.1%).
Last week, the German government raised its forecast for GDP growth for 2024 by 0.1%, to 0.3%, citing "signs of slight cyclical improvement." Economy Minister Robert Habeck said production was "on the up" due to sinking energy prices, which are also starting to drive inflation back down. Habeck said the government is expecting an inflation rate of 2.4% across 2024, falling to 1.8% in 2025.