Germany's economy accelerated growth, forecast for 2026 raised

Germany's economy grew by 0.3% in the second quarter of 2026 compared to the previous three months. The final estimate turned out better than the preliminary one, which predicted growth of only 0.2%, and exports became the main driver of the recovery.

This was reported by the Federal Statistical Office of Germany, Destatis.

Thus, Europe's largest economy continued its recovery after a prolonged period of weak dynamics. In the first quarter, Germany's GDP rose by 0.4%, and at the end of 2025 - by 0.3%. This means that the country's economy has been growing for three consecutive quarters – for the first time since the coronavirus pandemic.

On an annual basis, Germany's GDP in April-June was 1% higher than in the same period of 2025.

Exports became the main driver

Foreign trade made the largest contribution to growth. Exports of goods and services in the second quarter increased by 2% compared to the first quarter, while imports rose by 1.5%. The contribution of net exports to quarterly GDP dynamics was approximately 0.2 percentage points.

Exports of goods grew especially quickly – by 2.6%. According to Destatis, Germany significantly increased supplies of chemical products, computer, electrical and optical equipment, as well as transport engineering products. Trade in goods with other EU countries grew the strongest.

"The growth momentum of the German economy that began at the start of the year is continuing. As in the first quarter, growth was primarily driven by strong export dynamics", said Destatis President Ruth Brand.

Consumer spending by households and the government increased by 0.1%. At the same time, gross fixed capital formation decreased by 0.2%. The worst situation was with investment in machinery, equipment and transport vehicles – they fell by 1.4%.

Forecast for 2026 raised

After the publication of new data, the state-owned development bank KfW raised its forecast for German economic growth in 2026 to 1.1% from the previous 0.7%, Bloomberg reports.

"We see light at the end of the tunnel", said KfW chief economist Dirk Schumacher.

In his opinion, there are reasons to expect a noticeable recovery in industrial production, particularly thanks to fiscal stimuli.

Additional support to the economy should come from increased government spending on infrastructure and defense, as well as reforms by the government of Chancellor Friedrich Merz in the areas of taxes, pensions and business regulation.

Growth may slow in the third quarter

However, risks to the recovery remain. The Bundesbank warns that economic growth could significantly lose pace in the third quarter due to extremely low water levels on key German rivers.

Navigation restrictions raise transport costs and could negatively affect industrial production and exports. Private consumption is also pressured by high energy prices, while business investment is hindered by higher interest rates and still low industrial capacity utilization.

Despite improved indicators, Germany is still growing slower than the European Union as a whole. In the second quarter, EU GDP increased by 0.5%. Among the bloc's largest economies, Spain showed the highest pace at 0.7%, while France and Italy grew by 0.2%.

Based on materials from: Destatis, Bloomberg, Bundesbank