The leading EU economy received an unexpected boost

The German Ministry of Economics has more than doubled its forecast for GDP growth in this European country. Bloomberg reported this.

GDP is expected to grow by 1.3 percent in 2026 and 1.1 percent in 2027. Previous estimates suggested 0.5 and 0.9 percent, respectively. In 2028, the ministry expects a slowdown to 0.6 percent.

According to German Economics Minister Katerina Reiche, despite geopolitical uncertainty, a global drop in energy prices, the closure of the Strait of Hormuz and tariffs, the economy managed to get on the path to recovery within the first six months. Thus, the leading economy of the European Union survived the blow of the Middle East crisis better than expected. Moreover, an unexpected stimulus came from companies building up stockpiles of energy-intensive German-made goods in response to global supply constraints.

There is also data that points to some stabilization in the struggling manufacturing sector. Industrial production rose two percent in August, despite low water levels on the Rhine. In addition, government spending on rearmament had a positive impact on the economy. However, private consumption will remain subdued due to rising prices.