German Economy Beats Expectations in Q2

Germany's economy expanded by 0.2% in the second quarter of 2026, easing from an upwardly revised 0.4% growth in the previous quarter but surpassing market expectations of a 0.1% increase, according to preliminary estimates. Exports strengthened from the previous quarter, while household consumption remained subdued and capital investment declined. On an annual basis, the economy grew 0.9%, accelerating from an upwardly revised 0.7% expansion in the first quarter and also beating the 0.6% market forecast.

Germany’s economy expanded 0.3% in Q1 2026, matching preliminary estimates and slightly accelerating from a 0.2% rise in the previous period. It marked the fastest quarterly growth since Q1 2025, supported by stronger external demand, with exports sharply rebounding (3.3% vs -1.5% in Q4), while import growth stayed subdued (0.1% vs 1.0%). Meantime, government spending continued to grow (1.1% vs 1.5% in Q4) even as household consumption was flat after rising 0.6% previously, suggesting weak domestic demand. Gross fixed capital formation fell 1.5% after increasing 1.3% previously, dragged by lower construction investment (-2.5% vs 0.8%) and weaker equipment spending (-1.2% vs 2.5%), while growth in other facilities also slowed (0.6% vs 1.0%). Inventory changes weighed on the economy, subtracting 0.9 percentage points after contributing positively in Q4. On an annual basis, the GDP grew 0.4% in Q1, unchanged from the prior quarter.

Germany’s gross domestic product rose 0.3% in the first quarter of 2026, above market expectations of a 0.2% growth and following a downwardly revised 0.2% increase at the end of 2025. Growth was supported by stronger private and government consumption, while exports also showed an uptick according to preliminary estimates. On an annual basis, the economy expanded 0.3% compared with the first quarter of 2025