According to the current issue of the Bundesbank’s Monthly Report, the German economy is likely to pick up slightly in the first quarter of 2025. Industry and construction increased output in January following a weak year-end. However, the basic tendency in industry remains weak according to the experts. Private consumption did not provide any stimulus to growth at the beginning of the year. By contrast, the services sector is likely to make a slightly positive contribution to growth in the first quarter. 

Writing in an op-ed piece in the German “Handelsblatt” newspaper, Sabine Mauderer, First Deputy Governor of the Bundesbank, has underlined the importance of an autonomous Europe in times of geopolitical tensions. That autonomy will only succeed with a strong German economy, she explained. “Firms need to be able to rely on funding from a European financial ecosystem, especially when they have to navigate challenging geopolitical times.”

How does central bank communication affect the economy? Artificial intelligence provides new insights: the Monetary-Intelligent Language Agent (MILA) model developed at the Bundesbank analyses monetary policy statements and assesses the signals they send out – from restrictive to accommodative. This presents promising opportunities for better shaping monetary policy messaging. But AI-assisted analyses also pose inherent risks, such as diminishing diversity of opinion.

Germany is facing major challenges. Smart, consistent and reliable economic policy could set out the framework and unleash the sense of change we now need, Bundesbank President Joachim Nagel commented. In a speech at the Berlin School of Economics, Mr Nagel presented twelve points that he believes are key to boosting growth in Germany. For each set of topics, he examined four points: for an increased supply of labour, for the necessary transition towards net zero, and for a more dynamic corporate sector.