With stronger than expected growth in the third quarter, the German economy is heading towards its "best year since 2022"

Germany's growth was stronger than expected in the third quarter, reaching 0.2%, as increased government and household spending helped offset falling exports, the Federal Statistical Office said on Friday. The gross domestic product (GDP) of Europe's largest economy increased by 0.2% from July to September compared to the second quarter of 2026, "after correction for price, seasonal and calendar variations", according to a press release. Analysts on the Factset platform expected growth of only 0.1%.

Carsten Brzeski, ING economist, was optimistic about the coming months: “the German economy is continuing its recent recovery and is in its longest series of growth since the end of the confinements linked to the Covid pandemic”. According to him, Germany is “on track” to achieve its “best year since 2022”, the economy having “resisted the energy price shock better than expected”. The low levels of the Rhine this summer disrupted the transport of goods. He notably pointed out the important role of the government's vast fiscal stimulus, through hundreds of billions of euros of investments in defense and infrastructure which are beginning to "gradually irrigate the economy".

The increase in GDP, however, slows down compared to that recorded in the second quarter (0.3%), partly due to the very low levels of the Rhine this summer which severely disrupted the transport of goods. But “the data shows that the economy continues to do better than expected,” said Jens-Oliver Niklasch, of the LBBW bank. “The one-off negative effects linked to the summer drought or a reorientation of production in the automobile industry have certainly slowed the trend, but without succeeding in reversing it,” he said.

Given the resilience of the German economy in the face of the war in the Middle East, the government raised its growth forecast for 2026 to 1.3% at the beginning of October, raising it by 0.8 points compared to the spring. On the employment side, the recovery traditionally expected in the fall still remained sluggish according to official figures published Friday, with an unemployment rate stable in October at 6.4%.

Machine-translated from French