Germany. Definitely not a "Sommermärchen".

Unfortunately, it won't be quite that easy. Although the German economy held up surprisingly strongly in the 1st quarter of the year, growing by 0.3 percent compared to the previous quarter, this robust performance should not be seen as an indicator of the development of the current quarter. First, the final quarter of 2025 was revised slightly downwards. And growing from lower levels is easier. Second, performance in the first three months of the year was driven by exports and government consumption. Private consumption stagnated, while investment was weaker than in the previous quarter.

Looking at the current environment, there is neither good news for the tailwinds nor for the headwinds of the first quarter. Export order books are at low levels and new and old supply chain disruptions are increasingly weighing on global trade. It therefore seems unlikely that exports will once again be named MVP in the growth game in the second quarter.

Relying on a return of private consumption and investment does not seem to be a profitable tactic either. Both players are currently injured - a high level of uncertainty and increased energy prices are taking their toll. Private households are particularly affected by the current energy price shock. On the one hand, you have to dig deeper into your wallet at the petrol station, and on the other hand, energy price inflation is already having its first effects on other products. Double-digit inflation rates like those in 2022 are unlikely, but even if the war in the Middle East were to end quickly, inflation is likely to rise to around 4 percent over the summer. This does not bode well for the buying mood and, in view of the great uncertainty, companies also seem to have lost some of their willingness to invest, as the results of the ECB's latest Bank Lending Survey show.

Speaking of the ECB – just in time for the first World Cup match, the central bank is expected to deliver the first interest rate hike since September 2023. Not because an interest rate hike could really curb inflation driven by energy prices. Rather, to capture inflation expectations and prevent second-round effects.

Looking beyond the summer, at least from an economic point of view, could bring more optimism again. After all, the great hopes of infrastructure investment and defense spending have not disappeared despite the short-term setback due to the geopolitical situation. You could say they're still warming up to turn the game around at a later date.

And if the structural challenges of the future are not ignored in view of the short-term setbacks, a comeback could well be possible for the German economy in the course of the second half of the year. Although not a sure-fire success.