German economic performance brightened somewhat in the first months of the year, according to the country's central bank.
"Real gross domestic product (GDP) is likely to have increased slightly in the first quarter," according to the Bundesbank's monthly report published on Thursday.
Previously, experts had forecast a slight decline in economic output at the beginning of the year. However, they said, it is not yet clear whether an apparent increase in economic output would continue in the second quarter. "Overall, there is still no sign of a sustained improvement in the German economy," the Bundesbank report said.
In the final quarter of 2023, gross domestic product contracted by 0.3% compared to the previous quarter.
The Bundesbank pointed to the recent slight increase in industrial production and a rise in exports. In addition, construction benefited from exceptionally mild weather in February.
However the basic headwinds for Europe's largest economy have not changed substantially.
Industrial production remains weak in many economic sectors and the negative trend in demand for residential construction has not yet been turned around. Private consumption, which is an important pillar of the economy, is also not expected to provide any major impetus for the time being. Despite falling inflation rates and rising wages, private households are still reluctant to spend.
The Bundesbank expects the inflation rate to fall further in April.
"However, the rate could jump back to a value of around 3% in May, as the introduction of the Deutschlandticket had dampened the price level a year earlier," explained the experts.
The recent rise in oil prices and continued strong wage growth are also likely to contribute to the expected increase.
