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[BUSINESS] · Germany · 24 sources

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German economy posts modest Q2 growth despite Iran conflict

Preliminary data from the Federal Statistical Office show that Germany's gross domestic product rose by 0.2 % quarter‑on‑quarter in the second quarter of 2026, slightly beating the 0.1 % increase analysts had expected. Exports increased compared with the previous quarter, while consumer spending stayed subdued and investment fell despite the government’s multi‑billion‑euro programme for roads, rail and defence.

The Bundesbank linked the modest expansion to the ongoing Iran‑related war in the Persian Gulf, which has kept oil‑price volatility high and strained the energy‑import‑dependent German economy. Inflation is projected to rise again in the coming months, driven mainly by the expiry of the fuel‑subsidy at the start of July. At the same time, the Ifo business‑climate index improved for the third month in a row in July, reflecting a cautiously optimistic sentiment among firms.

German policymakers have agreed on a reform package that includes measures to cut bureaucracy, stabilise social‑contribution rates and support future‑industry sectors, aiming to bolster domestic demand while external shocks persist.

Entities

Bundesbank · Federal Statistical Office · Federal Statistical Office (Destatis) · German Federal Government · German Federal Statistical Office · German Federal Statistical Office (Destatis) · German consumer · German economy · German government · Germany · Ifo Institute · Iran

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