German economy grows in Q2 of 2026 despite global conflicts

Germany’s Federal Statistical Office (Destatis) has revealed that the country’s economy grew in the second quarter of 2026, despite strain caused by global conflicts.

German GDP grew by 0,2 percent compared to Q2

In the months of April to June this year, the German economy grew by 0,2 percent compared to the previous quarter and 0,9 percent higher compared to a year ago, according to a Destatis report. This is the third consecutive increase in gross domestic product (GDP), after a growth of 0,3 percent in Q4 of 2025 and 0,4 percent in Q1 of 2026.

“The figures, including the upward revision for the first quarter, are better than expected,” analyst at Landesbank Baden-Württemberg Jens-Oliver Niklasch told tagesschau. This is perhaps unsurprising as the European Commission predicted that Germany’s GDP would grow by 1,2 percent in 2026. 

But which factors are contributing to the growth? An increase in industrial orders, production, exports, building permits and retail sales, alongside government investments in infrastructure and defence, is likely behind the increase. "All in all, sentiment seems to be worse than the actual situation. Fears regarding the impact of the conflict in the Persian Gulf have so far proven unfounded," said Niklasch.

Germany not out of the woods yet

After the German economy lagged behind the European Union average for years, the last few quarters show significant improvement. While some experts believe there is potential for further growth, this could be limited due to remaining risks.

As the conflict in the Middle East continues, Germany faces high energy and fuel prices. "The further course of the economy in the second half of the year, which started positively, depends particularly on developments in the Middle East," said Philipp Scheuermeyer, economic expert at the KfW development bank.

Additionally, high US tariffs, manufacturing competition with China and low water levels on the Rhine caused by the recent weather conditions could all impact the German economy. "Overall, the effects could be strong enough to reduce gross domestic product by 0,1 to 0,2 percent in the third quarter," said economist Stefan Kooths from the Kiel Institute for the World Economy (IfW).

While 2026 is no longer panning out to be the year of growth expected, with GDP growth predictions revised to just 0,5 percent this year, experts are now saving their optimism for 2027, where they forecast GDP to grow by over 1 percent.