ISTANBUL

The German economy could see a contraction in the second quarter, the German central bank said on Thursday.

The Bundesbank said economic output in the country is likely to have increased slightly in the first quarter of 2025 but could suffer a setback in the next quarter.

"Averaged across January and February 2025, industrial output rose slightly on the quarter," the bank said, adding that this was, however, driven by fairly heterogeneous developments in individual sectors.

"For example, production of consumer goods and intermediate goods increased slightly, while production of capital goods fell short of its average from the previous quarter," it said.

The bank’s economists said that low capacity utilization in industry is continuing to have a negative impact on firms’ propensity to invest.

Retail sales grew further in January and February, pointing to marginally higher private consumption, it highlighted.