Germany's export sector showed signs of recovery at the start of the year, bolstered by government spending that fueled a growth slump before the outbreak of the Iran war.

The statistics office reported on Friday that rising foreign trade and increased government spending offset sluggish consumer demand and declining investment, ensuring overall growth of 0.3% in the first quarter, confirming an earlier estimate of GDP.

Ruth Brand, head of the Federal Statistical Office, said: "After a slight increase towards the end of 2025, the German economy also began 2026 with positive growth." She added: "Exports, in particular, rose significantly at the beginning of the year, which supported Germany's economic performance."

These results offer Chancellor Friedrich Merz some breathing room after facing pressure to revive growth through sweeping reforms. The German economy, the largest in Europe, has not seen significant growth for three years, and disagreements within the government have made improving its prospects even more difficult.

Efforts to revive the German economy are becoming increasingly complicated as uncertainty persists in the Middle East. A peace agreement between the United States and Iran remains elusive, keeping the Strait of Hormuz closed and energy prices high, while the Economy Ministry has halved its 2026 growth forecast to just 0.5%.