# German economy likely grew in Q1, beating expectations – Bundesbank
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2023-04-24
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: German economy likely grew in Q1, beating expectations -
Meta Description: The German economy likely expanded in Q1, surpassing expectations as industrial production rebounded. Insights from the latest Bundesbank report.
URL: https://financedigest.com/german-economy-likely-grew-in-q1-beating-expectations-bundesbankhtml

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FRANKFURT (Reuters) – The German economy is likely to have expanded in the last quarter on a rebound in industrial production, the Bundesbank said in a monthly report on Monday, revising its previous prediction of a small contraction.

The euro zone’s biggest economy has struggled for much of the past year as sky-high energy prices weighed on its vast industrial sector, but a modest rebound has been under way since gas prices fell back, boosting hopes that a recession can be avoided.

“The German economy did better in the first quarter of 2023 than expected a month ago and activity is likely to have picked up again somewhat,” the Bundesbank said. [“Industry recovered more strongly than expected.”](https://www.financedigest.com/german-industrial-orders-slump-more-than-expected-in-august.html "German industrial orders slump more than expected in August")

The Bundesbank’s mild optimism is consistent with a recent string of survey data, which point to a mild recovery after a 0.4% contraction in the fourth quarter, even if [growth could remain](https://www.financedigest.com/euro-zone-credit-growth-remains-brisk-despite-gloomy-outlook.html "Euro zone credit growth remains brisk despite gloomy outlook") below trend for some time.

Falling gas [prices supported energy](https://www.financedigest.com/swedish-energy-minister-need-to-decouple-gas-from-electricity-price.html "Swedish energy minister: need to decouple gas from electricity price") intensive industries while supply bottlenecks continued to ease, car demand picked up and construction also got a boost, even if that was partly due to mild weather.

Industrial orders also surged recently, which may suggest that demand for manufactured goods has passed its cyclical bottom, the [central bank](https://www.financedigest.com/global-central-banks-extend-rate-hike-push-in-november.html "Global central banks extend rate hike push in November") said.

High employment should also keep supporting consumption, and unemployment is likely to [fall slightly in the coming month](https://www.financedigest.com/world-food-price-index-falls-for-sixth-month-in-sept-fao.html "World food price index falls for sixth month in Sept -FAO"), the bank added.

But the outlook is still mixed as inflation continues to weigh on consumption and the reversal in underlying [price pressures has yet to work its way through to consumers](https://www.financedigest.com/ikea-reports-record-sales-as-price-hikes-offset-weakening-consumer-confidence.html "IKEA reports record sales as price hikes offset weakening consumer confidence").

Still, price growth is likely to keep [easing and even if core inflation](https://www.financedigest.com/factbox-government-measures-to-ease-inflation-pain-5.html "Factbox-Government measures to ease inflation pain") remains elevated for some time, services inflation should ease slowly, the Bundesbank added.

(Reporting by Balazs Koranyi; Editing by Kevin Liffey)


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