German economy grows surprisingly in summer

Gross domestic product German economy grows surprisingly in summer As of: October 30, 2026 • 10:50 a.m

After a strong half-year, the recovery of the German economy continued in the summer. Many experts had expected stagnation. However, private spending remains subdued.

There was surprising growth in the German economy in the summer. The gross domestic product (GDP) rose by 0.2 percent from July to September compared to the previous quarter, as the Federal Statistical Office announced today in an initial estimate. In advance, economists had largely expected stagnation, at most a mini-plus of 0.1 percent.

It is true that the low water levels in the summer stalled the economic recovery somewhat. In the first two quarters it increased by 0.4 percent and 0.3 percent respectively compared to the previous quarter. But the feared decline in economic output in the summer did not materialize, although low water levels on the Rhine slowed down inland shipping and put a strain on industries such as chemicals and steel.

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As the Federal Statistical Office also announced, consumer spending developed slightly positively compared to the previous quarter. On the other hand, according to preliminary findings, investments fell. The export development, which was still very dynamic in the first half of the year, weakened noticeably in the third quarter.

Overall, the signs in Germany point to an economic recovery, driven primarily by more government spending on infrastructure and defense. Experts and the federal government expect growth of more than one percent in 2026. However, since private investment remains subdued, most economists are not yet talking about a sustainable and self-sustaining upswing.

"The fact that the economy delivers the next plus is primarily due to the debt-financed fiscal package. Without this artificially initiated stimulus, economic output would probably have stagnated," said Alexander Krüger, chief economist at Bethmann HAL.

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According to the Berlin DIW Institute, the economy is likely to improve noticeably at the end of the year. “The German economy is apparently starting a year-end spurt, especially because industry is finally finding its feet again after years of weakness,” said DIW economics director Geraldine Dany-Knedlik recently. “But we are still a long way from a broad upswing.”

The increase is primarily driven by industry. However, private households continued to hold back due to high prices and a weak labor market. “So far, the upswing only rests on one leg - the state,” explained the German Institute for Economic Research (DIW), with a view to the additional spending by the public sector.

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Most recently, the most important barometer for the German economy, the business climate index from the Munich ifo Institute, rose for the sixth time in a row. The economy is continually working its way out of the valley, said ifo survey director Klaus Wohlrabe in an interview with the Reuters news agency.

However, the persistently high inflation as a result of increased energy prices continues to curb consumers' willingness to spend. “Germany is fighting its way back, but is ‌not yet ‌at the forefront again,” ‌emphasized Wohlrabe.

This topic in the program: tagesschau.de | Gross domestic product | 10/30/26 | 10:45 am