Despite the unexpected boost from industry and construction in the first quarter, Germany’s economy is still not showing sustained improvement. Demand for industrial products both domestically and abroad continues to decline, and higher interest rates and economic uncertainty are holding back investment. Households are also hesitant to spend, which may hinder the continuation of economic growth in the second quarter.
Germany’s weak demand conditions and poor consumption activity continue to make it a sick man of Europe. This could lead the ECB to consider loosening policy sooner rather than later in order to stimulate economic growth.