Berlin: The German economy could face a contraction in the second quarter, the German central bank announced on Thursday. The Bundesbank reported that although there was a slight increase in economic output in the first quarter of 2025, a setback might occur in the upcoming quarter.

According to Anadolu Agency, the Bundesbank observed that industrial output saw a modest rise across January and February 2025, but this growth was marked by varied developments in different sectors. Specifically, there was a slight increase in the production of consumer and intermediate goods, while the production of capital goods lagged behind its average from the last quarter.

The Bundesbank's economists pointed out that the ongoing low capacity utilization in the industry sector is negatively affecting companies' willingness to invest. Despite this, retail sales experienced growth in January and February, suggesting a slight increase in private consumption.