German Economy Grows but Jobless Rate Crosses 3 Million

Germany’s economy expanded more than expected in the first quarter of 2026, with gross domestic product rising by 0.3%, surpassing forecasts of 0.2%. The growth was mainly driven by stronger household consumption, increased government spending, and a rise in exports. However, the previous quarter’s growth was revised slightly downward, reflecting ongoing economic uncertainty.

Despite this positive start to the year, Europe’s largest economy continues to face challenges, including high energy costs linked to geopolitical tensions and increased competition from China. Inflation also climbed to 2.9% in April due to rising energy prices, prompting the German government to lower its annual growth forecast for 2026 to 0.5%.

Meanwhile, unemployment rose more sharply than expected, exceeding the 3 million mark in April. The number of jobless increased by 20,000 to 3.006 million, while the unemployment rate remained steady at 6.4%. Labour officials warned that there are still no clear signs of recovery in the job market, with hiring demand also showing signs of weakening.

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