Official data – issued by the German Federal Statistical Office – showed that the economy recorded a slight growth of 0.2% during the first quarter of this year, avoiding entering into a stagnation thanks to the recovery of consumption and private investment, despite the continued pressure on the labor market and the high unemployment rate.
According to the report – which was reported by Reuters – this growth came after a contraction of 0.2% in the last quarter of 2024, which would confirm the stagnation if it was repeated in the first quarter.
On the other hand, the Labor Office indicated that the number of the unemployed increased during April by 4 thousand people after the seasonal amendment, to 2.92 million people, approaching the 3 million barrier for the first time in a decade, while the unemployment rate increased to 6.3%, which is its highest level (except for the period of the pandemic) since December 2015, according to what was reported by the German News Agency.
Inflation is declining for the second month in a row
The Federal Statistical Office in Wiesbaden reported that the annual inflation rate fell to 2.1% in April, down from 2.2% in March, which enhances the possibilities of the European Central Bank’s resort to reducing interest rates in July, according to Reuters.
The data showed that energy prices fell by 5.4% compared to April of last year, due to the low oil prices against the backdrop of the global customs conflict, while food prices increased by 2.8%, but the pace of its rise is relatively slowing.
On the other hand, the basic inflation – which excludes energy and food prices – increased to 2.9%, which may complicate the European Central decision on cash facilitation.
Warnings of continuous structural challenges
In a comment by German, Jurer Kramer, chief economist at Komers Bank, said that the rate of growth registered “should not hide the fact that the German economy is still far from a strong and sustainable recovery.”
He added that the customs policy pursued by US President Donald Trump, which includes new drawings packages, casts a shadow over the economy of Germany, which relies heavily on exports.
A mysterious future
The German Central expectations indicated that the gross domestic product may remain in a stagnation during this year, to become Germany, the only member of the seven group, which records a contraction over 3 consecutive years.
Despite the decline in the inflation rate, the prospects for economic growth in Germany are still unclear, amid high employment prices and weak global demand, as well as the increasingly protective American policies that threaten international trade.
