Economic boom in Germany: GDP growth surprises experts!

Economic boom in Germany: GDP growth surprises experts!

The German economy accelerated unexpectedly in the first quarter of 2023, as the FAZ reported. Gross domestic product (GDP) rose by 0.4 percent from January to March compared to the previous quarter, marking the strongest growth since the third quarter of 2022. This positive development was primarily boosted by an increase in March.

Growth for the first quarter was originally estimated at just 0.2 percent. Increased investment as well as an increase in private consumption and exports contributed to the economic recovery. Nevertheless, economists express concerns that this economic momentum is sustainable. Many experts expect a decline in growth for the second quarter. Commerzbank has already revised its growth forecast for the entire year to 0.2 percent after previously predicting stagnation.

Exports and private consumption expenditure

In the first quarter of 2023, exports rose by 3.2 percent, but remain 1.1 percent below the previous year's level. Important export goods such as pharmaceutical products and cars were particularly in demand. In addition, traders may have shipped goods to the US before tariff increases, which could have a long-term negative impact on future deliveries.

Private consumption also showed positive signs: spending rose by 0.5 percent, which can be attributed to wage increases and the population's increased willingness to consume. The savings rate fell from 13.6 to 13 percent. On the other hand, government consumption fell by 0.3 percent due to reduced spending in the preliminary budget.

Employment and structure of the economy

In the first quarter, 45.8 million people were employed in Germany, which corresponds to a decrease of 60,000 employees compared to the previous year. While employment in manufacturing and construction fell, the service sector grew. The average working hours of those in employment increased by 0.4 percent compared to the previous year.

The GDP forecasts for Germany are prepared by various institutions, including the Federal Ministry for Economic Affairs and Climate Protection and the Deutsche Bundesbank, which publishes monthly reports on the national economic situation. Banks and financial institutions such as LBBW are also active in producing GDP forecasts, with the LBBW Research department playing a leading role LBBW mentioned.

GDP will shrink by -0.3 percent in 2023. Current figures also show that GDP per capita in Germany was 49,525 euros in 2023, while it is expected to rise to 50,836 euros in 2024. GDP per capita is calculated by dividing total GDP by population.

It is important to emphasize that GDP forecasts are subject to uncertainty, which can be influenced by various factors such as data quality, model assumptions and unforeseeable events. GDP measures the total value of goods and services produced within the geographical borders of a country and also includes the values ​​of non-German citizens, while gross national product refers to the values ​​produced by German citizens, regardless of location.

Overall, the current economic situation makes it clear that Germany is facing challenges of both a structural and economic nature.