Robust economic developent in second quarter
Despite the problems caused by the conflict in the Middle East, the German economy de-veloped more positively in the spring than had generally been expected. According to pre-liminary data from the Federal Statistical Office on 30 July, GDP rose by 0.2% between the first and second quarters after adjustment for price, seasonal factors and calendar ir-regularities. For Q1, the increase in GDP has been revised slightly upwards, from +0.3% to +0.4%. In the first half of 2026, GDP was nearly one percent up in year-on-year terms.
According to data from the Federal Statistical Office, exports were the main driver of growth in Q2. This is likely due not least to a more favourable competitive situation for Germany’s energy-intensive industries compared with their Asian rivals. In view of their greater dependency on energy supplies from the Middle East, the latter were more affect-ed by price increases and supply bottlenecks. The shift in demand to European and Ger-man suppliers is reflected in the sharp rise in output and foreign sales of German energy-intensive industries. In contrast, no stimulus derived from domestic demand in the second quarter; according to the Federal Statistical Office, public and private spending on con-sumption was flat, and investment declined.
Despite the continuing tensions in the Middle East, the supply situation of the German economy has recently improved to some extent. According to the latest surveys by the ifo Institute, 13.7% of companies reported material shortages in July, following 17.2% in June. In the chemical sector, the proportion of companies with supply issues even dropped from 29.5% in June to 13.8% in July.
Leading indicators for the third quarter generally show a very positive assessment of fu-ture economic development: business expectations have recently brightened, as reflected in the renewed rise in the ifo Business Climate Index, the S&P purchasing managers in-dex and the sentix Sentiment index for Germany; there was also a clear improvement in the ZEW Indicator of Economic Sentiment. The Truck Toll Mileage Index, which tends to be a leading indicator for the month’s industrial output, rose appreciably in July, accord-ing to data from the Federal Statistical Office.
However, the current low water levels on major German inland waterways mean that the risk of temporary regional material shortages has risen in the oil, chemicals, construction and steel industries in particular. It is true that many companies have altered their transport logistics in recent years, are maintaining larger stocks, and are using a variety of transport routes in order to make their supply chains more resilient. Nevertheless, the re-duced loading capacity is already resulting in a clear rise in transport costs. Depending on the duration of the low water levels, temporary restrictions on output of affected com-panies can be expected, as well as regional and product-specific price effects due to higher transport and freight costs, and this could reduce output in Q3.
World economy remains robust despite higher energy prices
Global industrial output stabilised in May following two declines, and was virtually unchanged in month-on-month terms (+0.1%). Whilst output in the advanced economies fell slightly ‑0.1% compared with April 2026, production in the emerging economies saw a moderate expansion (+0.3%). It was still slightly up in the year-on-year comparison, at +1.0%. The leading indicators for the global economy recently saw an improvement: the S&P Global Purchasing Managers’ Index (PMI) for the world economy rose by 0.6 points to 52.6 in July, continuing to signal robust growth. At 52.1 points, industrial sentiment remained at roughly the previous month’s level, whilst the index for the services sector clearly pointed upwards (+0.8 to 52.5). The sentix Sentiment index for the global economy brightened for the fourth month in succession in August, reaching the highest level since February 2026. Following the collapse in sentiment in spring 2026 due to the Iran war, it improved to 14.7 points in August.
According to the CPB Netherlands Bureau for Economic Policy Analysis, world trade rose by a seasonally adjusted 1.0% in May compared with April. It had already seen a moderate expansion of 0.3% in the preceding month. Whilst the conflict in Iran appears to have affected trade mainly within the Gulf region, its global impact has so far remained limited. Accelerated stockbuilding, together with strong demand for AI-related electronics, is also likely to have bolstered the global development in recent months.
The RWI/ISL Container Throughput Index stabilised further in June, with a slight rise to 143.1 points. The Nordrange index and activity in Chinese ports increased in June. The International Monetary Fund’s Trade Monitor pointed to a robust development in global trade in June.
You can read more information about the economic situation in August 26.
