{"id":322746,"date":"2026-03-10T17:04:14","date_gmt":"2026-03-10T17:04:14","guid":{"rendered":"https:\/\/www.newsbeep.com\/nz\/322746\/"},"modified":"2026-03-10T17:04:14","modified_gmt":"2026-03-10T17:04:14","slug":"germanys-very-weak-start-to-2026-puts-recovery-in-doubt","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/nz\/322746\/","title":{"rendered":"Germany\u2019s \u2018very weak start\u2019 to 2026 puts recovery in doubt"},"content":{"rendered":"

Stay informed with free updates<\/p>\n

Simply sign up to the German economy myFT Digest — delivered directly to your inbox.<\/p>\n

Weak export and industrial data has cast doubt on the strength of Germany\u2019s recovery from years of stagnation, even before any shock from the recent surge in energy prices.<\/p>\n

The \u201centire German economy\u201d had a \u201cvery weak start to the new year\u201d, said ING\u2019s global head of macro Carsten Brzeski on Tuesday after trade data for January showed a 2.3 per cent monthly fall in exports and 5.9 per cent drop in imports.<\/p>\n

The larger than expected declines came a day after Germany\u2019s statistical office reported that output in its all-important manufacturing sector fell for the second consecutive month in January.<\/p>\n

The data does not take into account any shock from the recent rise in oil and gas prices triggered by the Iran war, raising questions about whether Europe\u2019s largest economy can bounce back in 2026. <\/p>\n

\u201cOur optimism about Germany\u2019s growth prospects has taken a hit,\u201d Brzeski wrote in a note to clients, adding that the country\u2019s manufacturers were hit by US tariffs<\/a> and tough competition from Chinese rivals.\u00a0<\/p>\n

Order intake plunged 11 per cent in January due to a drop in volatile large-ticket orders.\u00a0\u201cThe decline in industry was very broad-based,\u201d Goldman Sachs economists said.<\/p>\n

January\u2019s sharp fall in imports could point to underlying weaknesses in the domestic economy<\/a>, although it meant Germany\u2019s trade surplus shot up by 21 per cent to \u20ac21bn.<\/p>\n

\u201cA fall in imports poses an upside risk to headline GDP growth this year,\u201d wrote Claus Vistesen, chief Eurozone economist at\u00a0Pantheon Macroeconomics.<\/p>\n

Economists had hoped that Chancellor Friedrich Merz\u2019s multibillion-euro investment package<\/a> would help Germany to finally return to higher growth this year after a multiyear recession. In 2025, the country\u2019s GDP expanded for the first time since 2022, eking out 0.2 per cent growth.<\/p>\n

A stronger than expected performance in the final three months of 2025, when GDP expanded by 0.3 per cent compared with the previous quarter, fostered optimism that growth could improve to 1 per cent this year.<\/p>\n

Germany\u2019s closely watched Ifo\u00a0business climate index rose slightly more than expected in February but investor morale captured by the ZEW indicator fell unexpectedly.<\/p>\n

The chance of higher interest rates in the wake of the recent energy price shock could create another headwind. <\/p>\n

Estonia\u2019s central bank governor Madis M\u00fcller said on Tuesday that it was more likely that the \u201cnext change\u201d in the European Central Bank\u2019s policy rates would be \u201can increase\u201d. However, he also stressed at an event in Vilnius, Lithuania, that policymakers should not rush to action. The ECB will next decide borrowing costs on March 19.<\/p>\n

However, BNP Paribas economists have argued that Germany\u2019s increased government spending will lift it out of economic gloom. <\/p>\n

\u201cWhile we remain optimistic about the growth outlook for the year as a whole, recent data are a reminder that the recovery process is likely to be non-linear,\u201d BNP economist Paul Hollingsworth told the FT on Tuesday, adding that \u201crenewed energy price headwinds resulting from the Middle East conflict are another source of downside risk\u201d.<\/p>\n

Merz last year opened the door for a \u20ac1tn fiscal stimulus over the next decade by excluding large parts of the defence budget from the country\u2019s tight constitutional debt brake and earmarking \u20ac500bn for additional infrastructure investment.<\/p>\n","protected":false},"excerpt":{"rendered":"Stay informed with free updates Simply sign up to the German economy myFT Digest — delivered directly to…\n","protected":false},"author":2,"featured_media":322747,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[138,219,111,139,69],"class_list":["post-322746","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-economy","tag-new-zealand","tag-newzealand","tag-nz"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/322746","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/comments?post=322746"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/posts\/322746\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media\/322747"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/media?parent=322746"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/categories?post=322746"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/nz\/wp-json\/wp\/v2\/tags?post=322746"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}