Europe’s largest economy expanded more than initially estimated in the second quarter, according to revised figures from Germany’s Federal Statistical Office. Gross domestic product rose 0.3% between April and June compared with the first three months of the year, up from an earlier reading of 0.2%. On an annual basis, output grew 1%, revised up from 0.9% and stronger than the 0.8% recorded in the first quarter.
The upgrade suggests Germany is absorbing the energy shock triggered by the war in Iran and the closure of the Strait of Hormuz better than many had feared. “The German economy is maintaining the growth momentum seen at the start of the year,” said Ruth Brand, president of the Federal Statistical Office, adding that growth was “primarily driven by the positive development of exports.”
Exports climbed 2% over the quarter, outpacing a 1.5% rise in imports, while household and government spending stayed subdued, each edging up just 0.1%. Manufacturing output rose 0.9%, led by the chemicals and electrical-equipment industries, and most service sectors also expanded. Construction was broadly flat, and financial and insurance services were a notable weak spot, contracting 0.7%. Investment slipped, weighed down by a 1.4% fall in spending on machinery and equipment.
A separate release pointed in the same direction. The closely watched Ifo Business Climate Index rose to 88.8 in August from 86.7 in July, comfortably ahead of the 87.2 economists had forecast, signalling improving sentiment across every major sector.
Taken together, the data offer firmer evidence of a recovery, though high energy prices and soft domestic demand remain clear risks. Germany’s economy has struggled for traction in recent years, held back by expensive energy, stiffer competition from China and US tariffs. Hopes of a stronger rebound this year had rested in part on Chancellor Friedrich Merz’s plans to lift spending on defence and infrastructure, but the fallout from the Iran war has clouded the outlook. The government now expects growth of just 0.5% in 2026, half its earlier forecast of 1%.
