German Economy Likely to Grow Despite Iran War, Bundesbank Says
The central bank said strong exports, government spending and resilient consumers are offsetting weaker activity from the Middle East conflict.
- On Tuesday, the Bundesbank reported Germany saw modest economic expansion in the second quarter, continuing into the third despite headwinds from the Middle East conflict affecting energy and commodity costs.
- Manufacturers are benefiting from strong foreign demand and rising exports, while the Bundesbank noted consumers remain "relatively unfazed" by high energy prices, keeping consumption spending stable.
- Both the Bundesbank and the government forecast expansion of just 0.5% for the full 12 months; a separate Bundesbank study found red tape costs German firms about 7% of revenue annually.
- Economists polled by Bloomberg expect second-quarter GDP growth to slow to 0.1% from 0.3%, while the Bundesbank anticipates inflation will accelerate beyond the current 2.4% level in coming months.
- Chancellor Friedrich Merz, who predicted 2026 would be a "year of growth," faces a challenge with this forecast; the Bundesbank expects growth to accelerate to 0.8% next year, though war-related drag remains.
23 Articles
23 Articles
Despite the continuing Iranian war, the predicted economic downturn has failed. Full order books and a founder boom arouse hope for better times. But a concern clouds the picture.
Although the increase in spring is only small, it is still the third quarterly growth in a row. Is this already a turnaround for the weak German economy?
The situation of the German economy has improved slightly. The Federal Statistical Office reports a mini-plus on gross domestic product.
Despite the burden of the Iran war, the German economy grew slightly in the second quarter. Gross domestic product (GDP) increased by 0.2 percent compared to the previous quarter, as calculated by the Federal Statistical Office on the basis of provisional data.
The Iran war is burdening the economy, but the German gross domestic product is growing in the spring. According to the Ifo Institute, the mood in the executive floors is also brightening. Experts expect only a small increase for the whole year due to various pressures.
The German economy grew minimally in the spring, despite the pressures of the Iran war.
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