German Economy Probably Grew in First Quarter, Bundesbank Says - BNN Bloomberg

(Bloomberg) -- A stronger-than-expected recovery in manufacturing at the start of the year probably helped Germany dodge a recession, according to the Bundesbank.

Europe’s largest economy grew slightly in the first quarter, the central bank said in its monthly report released on Monday. While persistently high inflation weighed on spending and consumer services, industry saw demand pick up as energy prices dropped and supply snarls eased.

The assessment precedes official data that will be released at the end of the week. Economists predict output increased 0.2% following a contraction of 0.4% in the fourth quarter that had raised questions about the health of the economy. 

First estimates for the euro zone and its largest members will also be published Friday.

In Germany, construction increased strongly in the first quarter even as higher prices and interest rates damped demand, the Bundesbank said, pointing to mild weather in January and February.

Near-term prospects remain promising too. Business confidence increased slightly in April as expectations improved. Optimism surrounding the manufacturing outlook “grew noticeably,” according to the Munich-based Ifo institute.  

Inflation will likely continue to slow, reflecting a drop in energy costs compared to last year, the Bundesbank said. Extraordinarily high price increases for food and other goods as well as services should ease too, though a trend reversal has yet to start — and underlying price pressures are likely to remain elevated, officials added.

Concurrently, the Bundesbank published its latest survey on households’ finances and wealth, covering developments through 2021. The study showed broad-based gains, but also wide inequality compared to European standards.

Median net wealth per household was €106,600 ($117,110), up more than 50% since the last survey in 2017. The average was €316,500, showing a 36% increase. While the richest households benefited the most in absolute terms, the poorest recorded some of the highest relative gains, partly reflecting savings during the pandemic.

The survey is conducted every three to four years. This round was the fourth since 2010. Polling for the next one will start in May, with results due for release in early 2025.

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German Economy Probably Grew in First Quarter, Bundesbank Says - BNN Bloomberg
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