Germany raises Q2 growth to 0.3 percent as exports hold the recovery

Germany's economy grew 0.3 percent in the second quarter from the first, the Federal Statistical Office said on 25 August, a tenth of a point stronger than the 30 July flash estimate of 0.2 percent.

Ruth Brand, president of Destatis, said the country kept the momentum it showed at the start of 2026 and that exports were the main driver. Exports rose 2.0 percent from the previous quarter. On a year-on-year basis, price-adjusted GDP was 1.0 percent higher than in the second quarter of 2025, up from 0.7 percent in the first quarter.

Where the growth did and did not come from

Household and government spending rose only slightly. Gross fixed capital formation fell 0.2 percent, an improvement on the 1.3 percent drop in the first quarter. Machinery and equipment investment was still weak, down 1.4 percent after a 1.7 percent fall. Construction investment edged up 0.1 percent after a 1.8 percent decline. The recovery, in other words, is an export story with a shallow domestic floor.

In current prices, GDP was 3.8 percent higher than a year earlier. Household income rose 3.1 percent. The savings rate was 9.6 percent, a tick above the 9.5 percent recorded a year earlier. People are earning more and still holding back a little of it.

The same morning, the Ifo business climate index rose to 88.8 in August from 86.7 in July. A Reuters poll had expected 87.2. Ifo president Clemens Fuest said the economy is recovering even with energy prices up again. Investor morale had already improved the week before. Factory output and exports beat forecasts in June.

The war and the forecast cut

Higher oil and gas prices after the Iran war are the drag that officials keep naming. In April the economy ministry cut its 2026 growth forecast to 0.5 percent from 1 percent. Chancellor Friedrich Merz came into office promising a defence and infrastructure spending wave. That wave has not yet shown up as a surge in capital formation. The 0.3 percent quarter is better than the flash print. It is not the rebound those forecasts once implied.

Germany also lagged the European Union average. EU GDP rose 0.5 percent in the same quarter. Brand's office put that comparison on the page rather than leaving it to analysts.

What the revision changes

A one-tenth revision does not rewrite a year. It does change the slope that markets and the government carry into the third quarter. Combined with the Ifo jump, the print tells firms that foreign orders are still arriving even while energy costs and US tariffs sit on the books.

The next test is whether machinery investment stops falling. An export-led 0.3 percent with shrinking equipment spending is a recovery that can stall if foreign demand dips. Destatis will publish the third-quarter flash at the end of October. Until then the official story is modest growth, led by goods leaving German docks, not by German households or German factories buying new machines.