German economy shocks markets despite war

The German economy experienced a slight growth of 0.2% in the second quarter of 2026, despite the challenges posed by the war in the Middle East, thanks to a rebound in exports that contributed to exceeding expectations for growth. The "Destatis" institute also revised its growth estimates for the first quarter upward from 0.3% to 0.4%. Despite disruptions in energy markets and the expansion of the conflict to include the Red Sea, the industrial sector remained resilient, supported by external demand and exports. The war has actually increased the competitiveness of German exports, especially in Asia, while consumers were not significantly affected by rising energy prices. Currently, the German economy relies heavily on substantial investments in defense and infrastructure to recover and stabilize.

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