The German economy received a surprising boost in the first quarter, thanks to the industry and construction sectors. However, there is still no evidence of sustained improvement in the overall economy. Despite this, demand for industrial products both domestically and abroad remains weak and continues to decline. Higher interest rates and economic uncertainty are holding back investment, while households are still hesitant to spend.
It remains uncertain whether this increase in economic output will continue into the second quarter. Germany is currently considered the “sick man of Europe” due to weak demand conditions and lackluster consumption activity. This perception has not changed as the second quarter begins. These issues may prompt the ECB to consider loosening policy sooner rather than later.
