Final data published by the Federal Statistical Office (Destatis) showed that in the 1st quarter, GDP grew by 0.4%, offsetting a 0.2% decrease in the 4th quarter and exceeding the preliminary estimate (+0.2%), due to the surprisingly good economic development seen in March (in particular, output in manufacturing and exports registered stronger growth than initially assumed). It was also the strongest GDP growth since the 3rd quarter of 2022 (+0.6% q/q). Economists had expected the economy to expand by 0.2%.
Destatis stated that foreign trade saw strong growth in Q1, with exports rising 3.2% compared to Q4 2024, driven largely by pharmaceutical and automotive goods - key sectors for the U.S. market. This growth may reflect anticipation of trade tensions with the U.S. Imports also increased, but at a slower pace of 1.1%. Household spending grew by 0.5%, showing a stronger rebound than in previous quarters. In contrast, government spending fell 0.3%, likely due to interim budget constraints and cuts in non-personnel expenses. Overall consumption rose by 0.2%. Investment activity improved, with fixed capital formation up 0.9%. Construction grew 0.5%, and investment in machinery and equipment rose 0.7%, marking a second consecutive quarterly gain. Gross value added grew 0.6% after four quarters of decline. Manufacturing (+1.0%) and construction (+0.9%) rebounded, particularly in chemicals, machinery, and automotive industries. However, metal products declined.
The data also showed that in annual terms, GDP remained unchanged after declining by 0.2% in the 4th quarter. Consensus estimates and preliminary estimates suggested a 0.2% contraction. The flat result comes after six consecutive quarters of GDP contraction.