German economy is recovering: biggest growth in three years!

German economy is recovering: biggest growth in three years!

The German economy recorded an increase of 0.4 percent in the first quarter of 2025, representing the largest growth in three years. This positive trend follows two years of economic contraction, characterized by inflation and weaker exports. This development is particularly notable since the economy previously experienced a sharp decline due to the corona pandemic, which is considered one of the most serious declines since the Second World War South German newspaper reported.

The decline in the German economy was not only caused by the pandemic, but also included the challenges of an inflation-related slowdown in export markets. According to analyzes by the DIW shows that the economic recovery is currently being supported globally, but there are also uncertainties due to rising raw material prices, which result from recovery trends and government economic stimulus programs.

Insight into raw material prices

In the context of the economic recovery, the rise in raw material prices is important. Starting in spring 2020, raw material prices fell due to the effects of the corona pandemic, but by mid-2020 prices for industrial and agricultural raw materials had already experienced a significant increase. The price of crude oil in particular recovered quickly and returned to pre-crisis levels by May 2021. This can be partly attributed to production cuts by the OPEC-plus countries, which have been partially reduced since the end of 2020.

Rising raw material prices are leading to higher producer prices, which is particularly noticeable in the USA and Europe. This development could dampen economic recovery in advanced economies, although a simultaneous recovery in several regions of the world could potentially boost commodity demand.

Prospects through state investments

Government funds, such as the US fiscal package of over US$2.5 trillion, have provided further impetus for job creation and could boost demand for raw materials. On the other hand, the challenge is that the production disruptions and supply chain problems caused by the pandemic still exist and are only likely to ease as restrictions are further lifted.

In summary, it can be said that the German economy is showing encouraging development, but it is not without challenges. The coming months will be crucial in observing how global trends in commodity prices and inflation will impact the domestic economy.