German economy: Bundesbank expects year-end spurt after summer stagnation

After a strong first half of the year, the recovery of the German economy is stalling. But the Bundesbank is already looking more confidently at the current quarter.

The drought summer has left its mark on the German economy. (Archive image) Photo: Thomas Riedel/dpa

Frankfurt/Main. After stagnation in the summer, the Bundesbank expects the German economy to make a year-end spurt. “German economic output is likely to grow noticeably again in the fourth quarter,” says the central bank’s October monthly report. “The further economic recovery depends not least on the development of the war in the Middle East.”

For the third quarter of 2026, the Bundesbank economists no longer even expect minimal growth in gross domestic product (GDP). The recovery of the German economy is “temporarily interrupted” after a positive first half of the year.

Low water puts pressure on industry

The decisive factor for this are “temporary stress factors”, especially the low water in the Rhine, which is putting a strain on the industry’s supply chains. Foreign trade was also noticeably weaker at the beginning of the second half of the year: “The low water levels are likely to continue to have a negative impact on foreign trade via European ports due to the restrictions on inland shipping.”

High inflation is slowing down consumers

Private consumption is being slowed by rising inflation. High energy prices in particular are currently a burden for consumers; the fuel discount at the time expired after two months at the end of June. According to the Bundesbank's assessment, private consumption is unlikely to have provided any growth impetus overall in the third quarter.

And the inflation rate will therefore remain elevated for the time being: “Despite the temporary reintroduction of the fuel discount for the months of October to December, the increase in energy prices is likely to remain at a very high level.”

A first official estimate of the development of the gross domestic product in the period July to September will be published on October 30th. expected from the Federal Statistical Office. In the first two quarters of 2026 there was an increase of 0.4 percent and 0.3 percent respectively.