German Economy Grows Despite Challenges
The German economy expanded by 0.3% in the second quarter despite burdens from the war in Iran. KfW Research has now revised its 2026 GDP growth forecast upwards to 1.1%.
Frankfurt – The German economy grew by 0.3% in the second quarter compared to the previous quarter, overcoming challenges posed by the war in Iran. This data was released by KfW Research on August 25, 2026.
The trend in new orders within the manufacturing sector continues to point upwards, and sentiment indicators have brightened. Consequently, KfW Research has revised its forecast for Germany's price-adjusted gross domestic product (GDP) growth in 2026 upwards to 1.1%. The forecast for 2027 has been set at 1.5%.
GDP forecasts for the euro area have also been revised upwards. However, inflation forecasts have been trimmed slightly. The KfW Business Cycle Compass provides in-depth analysis of economic developments and future outlooks for Germany and the euro area.
The report is part of KfW's regular economic assessment, aimed at providing timely information on the economic climate and projections.