Germany’s Economy Surges 0.4% in Q1, Doubling Initial Estimates

Germany’s economy showed a surprising burst of strength in the first quarter of 2025, growing by 0.4%—double the original estimate—according to new data released by the Federal Statistical Office on Friday.

The rebound, driven by unexpectedly strong performance in exports and manufacturing, marks a rare bright spot for Europe’s largest economy, which has struggled with stagnation and contraction in recent years.

Originally pegged at 0.2% growth, the revised figure comes after March’s robust economic activity exceeded expectations.

“The surprisingly good economic development seen in March led to this revision,” said Ruth Brandt, head of the statistics office. The last time Germany experienced stronger quarterly growth was back in Q3 of 2022, when GDP climbed by 0.6%.

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While this uptick offers a moment of optimism, many experts warn against seeing it as a turning point. The German economy contracted in the final quarter of 2024 and has now seen two consecutive years of overall decline. Structural challenges, including energy costs, demographic pressures, and international uncertainty, continue to weigh heavily.

Adding to the complexity are new trade tensions with the United States. President Donald Trump’s recently announced tariffs and trade threats have injected fresh volatility into global markets. Analysts believe some of Germany’s Q1 growth may be attributed to businesses ramping up exports ahead of the implementation of those tariffs.

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Carsten Brzeski, global head of macroeconomics at ING, characterized the growth as “a positive one-off.” In a research note, he suggested that industrial production and exports likely surged in March as companies raced to get ahead of what some have dubbed “Liberation Day”—the anticipated start date of Trump’s tariffs.

The new government under Chancellor Friedrich Merz, which took office earlier this month, is cautiously optimistic. Its panel of independent economic advisers forecasts a flat GDP for the rest of the year, with modest 1% growth expected in 2026.

However, they see potential in a massive infrastructure investment initiative being rolled out by the Merz coalition—a plan designed to modernize transport, energy, and digital networks.

For now, while Germany’s Q1 performance offers a glimmer of hope, the broader picture remains clouded by global headwinds and domestic structural issues. Whether this momentum can be sustained will depend largely on how Berlin navigates these challenges in the months ahead.