[REVISION HISTORY]

German economy: growth and rising costs amid mixed sentiment

Updated 59 times since CLSTR started tracking revisions of this situation.

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2026-09-02 22:35 UTC → 2026-09-08 19:43 UTC · added ~~removed~~

Germany’s economy has achieved its third consecutive quarter of growth, with revised Q2 2026 GDP rising by 0.3 percent. This expansion follows a three-year period of recession and stagnation, driven primarily by a 2.0 percent increase in the export of goods and services. Chancellor Friedrich Merz noted that the economy is showing signs of recovery, stating, “Three years of recession are behind us, now we are growing again.” While the manufacturing sector has seen its first year-on-year increase since early 2023, new data indicates emerging cost pressures. German industrial production prices rose by 3% in July, and import prices rose by 6.8% annually in July. This increase was largely driven by surging energy costs, which rose 26.4% year-on-year due to geopolitical tensions in the Middle East. Specifically, mineral oil products rose 47.5% and crude oil increased by 22.3%. Additionally, intermediate goods prices saw a 10.2% annual increase, with significant rises in copper and non-ferrous metals. The German chemical industry reported a notable turnaround in August, with its business climate index rising from -26.3 points in July to -2.4 points in August. Labor market indicators and consumer sentiment also show signs of improvement, though appetite for major purchases remains weak. Recent data highlights divergent trends in specific sectors. In Bavaria, the automotive trade saw growth in the first half of 2026, with nominal turnover rising by 4.0 percent and real turnover by 2.0 percent. In contrast, national retail figures for July 2026 indicate a downturn, as real retail turnover fell by 3.4 percent compared to June 2026. Non-food retail declined by 4.8 percent, and gas station sales dropped by 9.1 percent following the end of fuel discounts. In September, the HDE consumer barometer showed a slight increase of 0.52 points to 94.70, continuing an upward trend since May.

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