Germany’s economy expanded by 0.3% in the second quarter, up from a preliminary estimate of 0.2% and surpassing analyst forecasts, official data showed on Tuesday. The reading follows a 0.4% increase in the first quarter, marking three consecutive quarters of growth after two quarters of stagnation in 2025.
The Ifo Institute’s business climate index rose to 88.8 in August from 86.7 in July, exceeding the median forecast of 87.2 in a Reuters poll. The index, a closely watched gauge of corporate sentiment, signals a modest improvement in business conditions despite ongoing challenges.
Clemens Fuest, president of the Ifo Institute, noted that the economy is recovering despite renewed increases in energy prices. Ruth Brand, president of the German statistics office, said growth has maintained the pace observed at the start of the year.
Harry Chambers, assistant economist at Capital Economics, described the data as encouraging, citing resilience in the face of higher energy costs and disruptions to Rhine transport caused by dry weather. The Rhine, a key waterway for German trade, has faced periodic closures due to low water levels in recent months.
The positive economic data comes as Chancellor Friedrich Merz faces declining popularity in opinion polls ahead of regional state elections next month. The far-right AfD party is polling strongly in several states, raising questions about the political landscape amid the economic recovery.
