Germany’s economy showed unexpected growth in the first quarter, thanks to the increase in industry and construction. However, despite this progress, there is no evidence of a sustained improvement. The decline in domestic and international demand for industrial products continues to weigh heavily on the economy.
Higher interest rates and economic uncertainty are making it difficult for businesses to invest. Additionally, households are reluctant to spend money due to their own financial concerns. These factors have led to uncertainty about whether the country will see continued growth in the second quarter.
Despite these challenges, Germany remains an important player in the European economy. However, its weak demand conditions and poor consumption activity make it stand out as a “sick man” among other countries in the region. This could prompt the ECB to consider loosening policy sooner rather than later in order to support economic growth and stability.