Financial News: German GDP Growth Beats Expectations

German GDP Growth Beats Expectations

(RTTNews) - The German economy logged an unexpected faster growth in the first quarter, despite challenges posed by the war in the Middle East.

Gross domestic product grew 0.3 percent sequentially in the first quarter, slightly faster than the revised 0.2 percent expansion seen in the fourth quarter of 2025, preliminary estimate from Destatis revealed Thursday. The pace of growth was expected to ease to 0.1 percent.

On a yearly basis, GDP registered a calendar-adjusted growth of 0.3 percent, slightly weaker than the fourth quarter's 0.4 percent expansion. At the same time, price-adjusted GDP logged a steady growth of 0.5 percent.

Destatis said overall growth was underpinned by household and government consumption and exports. Detailed results of the first quarter GDP will be released on May 22.

Even if fears of another year of stagnation have returned, it should be clear that the planned investments in defence and infrastructure are still on track and should support the economy this year and beyond, ING economist Carsten Brzeski said.

"The fiscal impulse is real, it just needs time to reach the real economy," he added. The International Monetary Fund had projected the German economy to expand 0.8 percent this year, before improving to 1.2 percent in 2027.

The labor force survey results from Destatis today showed that the unemployment rate remained unchanged at 4.0 percent in March. The number of unemployed decreased 6,000 from February to 1.76 million.

Elsewhere, data from the Federal Employment Agency showed that the unemployment rate remained unchanged at 6.4 percent in April. The number of unemployed dropped by 20,000 from the previous month to 3 million in April.

Federal Employment Agency Chairwoman Andrea Nahles sad a trend reversal in the labor market is not yet in sight and the spring upturn was also weak in April. In a separate communiqué, Destatis showed that import prices increased at the fastest pace since February 2025. Import prices grew 2.3 percent on a yearly basis in March, offsetting the 2.3 percent fall in February. Economists had expected an annual increase of 1.6 percent.

On a monthly basis, import prices moved up 3.6 percent, following a 0.3 percent rise a month ago.

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