The German government has assessed that the economic situation in Germany has recently proved to be “quite robust.” According to the monthly report for August, published by the Federal Ministry of Economics on Thursday, the German economy experienced a “more favorable development than generally expected” in the spring, despite pressures resulting from the conflict in the Middle East.
The report notes that the gross domestic product (GDP) rose by 0.2 percentage points compared to the previous quarter, adjusted for price, season, and calendar effects. This growth was primarily driven by the foreign trade, while domestic demand remained subdued due to a loss in purchasing power and ongoing geopolitical uncertainties.
On a sectoral level, production in the manufacturing industry saw a slight increase of 0.2 percent in June. Meanwhile, orders received in the processing sector jumped 3.1 percent from the preceding month. However, price-adjusted retail sales decreased by 0.7 percent in June. Inflation rose to 2.8 percent in July, largely attributed to the discontinuation of the energy tax reduction on fuel.
The labor market, however, remained weak. In June, seasonally adjusted employment dropped by 23,000 people. Furthermore, the number of corporate insolvencies remained high, with 18,478 reported bankruptcies across individuals and corporations from August 2025 to July 2026, representing an 8.3 percent increase compared to the same period last year.
