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The European Central Bank is pictured in Frankfurt, Germany. (AP Photo/Michael Probst, File) FRANKFURT, Germany — The German economy grew faster than expected at the start of the year in a boost for the struggling eurozone powerhouse, data showed Wednesday, but US tariffs threaten to halt the nascent recovery. Gross domestic product (GDP) in Europe’s biggest economy expanded 0.
2 percent from January to March compared to the previous quarter, according to provisional figures from federal statistics agency Destatis. This was better than a forecast of 0.1 percent by analysts surveyed by financial data firm FactSet, and followed a 0.
2 percent contraction at the end of last year. The higher than expected growth was driven by improving household consumption and investment, according to Destatis. The agency will release detailed results for the first quarter next month.
It was some rare good news for Germany, which has been battling a manufacturing slowdown, rising costs and weak demand in key overseas markets, with the economy shrinking in both 2024 and 2023. It now faces a new threat from US President Donald Trump’s tariff blitz , and bolstering the economy stands as one of the most pressing tasks for incoming chancellor Friedrich Merz when he takes office next week. The Ifo institute warned levies in the United States, Germany’s top trade partner last year, could prompt the economy to contract again later in the year.
“The tightening in US tariff policy has meant that goods purchases in the US have been brought forward. Exports and industrial production in Germany benefited from this in the first quarter,” said Timo Wollmershaeuser, head of forecasts at Ifo. But higher tariffs for EU exports to the United States that kicked in from April will weigh on the economy later in the year, he warned.
France also released first-quarter growth data earlier Wednesday, showing the eurozone’s second-biggest economy expanded 0.1 percent after contracting in the previous quarter. A growth update is also due from the eurozone as a whole.
In a further sign of economic weakness for Germany, data released Wednesday showed unemployment edging up 0.1 percent to 6.3 percent in April — the second straight monthly increase.
After two years of contraction driven by surging energy prices after Russia invaded Ukraine and post-pandemic supply chain woes, the German economy was expected to start making a modest recovery this year. But the government last week downgraded its growth forecast for 2025 to zero, blaming Trump’s sweeping tariffs. Subscribe to our daily newsletter By providing an email address.
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