Germany GDP growth slows to 0.2% despite Mideast war

Germany's economy grew 0.2% in the second quarter of 2026, slowing from revised growth of 0.4% in the first quarter, provisional figures from the statistics office Destatis showed Thursday.

Output in the European Union's largest economy rose 0.2% from the first three months of the year. The figure was 0.1 percentage point higher than analysts polled by financial platform FactSet had expected.

Destatis said higher exports drove the growth, while consumption and investment were subdued. It also revised first-quarter growth upward to 0.4%.

ING bank analyst Carsten Brzeski said Germany had “defied the fallout from the war in the Middle East,” but said the result needed perspective because growth had been poor for years. He said the German economy remained smaller than in late 2022.

German businesses have faced weak demand and high costs at home, as well as US tariffs and stronger Chinese competition abroad. The Middle East war has also affected business sentiment and energy prices.

Dominic Deller, chief financial officer of valve-maker Samson, told AFP that slight growth was “an important signal but no sign of a real shift,” adding that industry still felt pressure from costs, bureaucracy and geopolitical uncertainty.

Chancellor Friedrich Merz has promised to borrow and spend hundreds of billions to improve infrastructure. Brzeski said Germany still needed reforms to improve competitiveness, a clearer plan for affordable energy and more incentives, such as tax cuts, to support domestic demand.