Germany returns to growth with 0.3% Q1 GDP expansion, but recovery remains fragile

Germany’s economy posted a modest expansion in the first quarter of 2026, offering early signs of recovery after a subdued 2025, according to official data released on Thursday.

Gross domestic product (GDP) rose 0.3 per cent quarter-on-quarter in the January–March period, adjusted for price, seasonal and calendar effects, data from Federal Statistical Office (Destatis) showed. The growth follows a revised 0.2 per cent increase in the fourth quarter of 2025, indicating a gradual stabilisation in economic activity.

On an annual basis, Europe’s largest economy grew 0.5 per cent in real terms compared with the same quarter last year, while the calendar-adjusted increase stood at 0.3 per cent, reflecting a still-muted but improving trajectory.

The uptick in growth was driven primarily by stronger domestic demand. Both private consumption and government spending increased during the quarter, suggesting improving sentiment among households and public sector support to the economy. Preliminary data also indicated a rise in exports, providing an additional boost amid a challenging global trade environment.

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However, the recovery remains fragile. The statistical office revised down Germany’s full-year 2025 GDP growth to 0.3 per cent from an earlier estimate of 0.4 per cent, highlighting the slow pace of expansion. The fourth-quarter 2025 growth figure was also lowered slightly, reflecting weaker-than-expected momentum heading into 2026.

Economists note that while the latest data signals a positive turn, Germany continues to grapple with structural challenges, including weak industrial output, high energy costs, and global demand uncertainties. The reliance on consumption and exports for growth suggests that sustained recovery will depend on broader improvements in business investment and manufacturing activity.

The Federal Statistical Office said detailed national accounts data for the first quarter will be released on May 22, which will provide deeper insights into sector-wise performance and underlying economic drivers.