German economy grew more than expected in Q3, underpinned by state spending
EWG•Germany’s GDP rose 0.2% in the third quarter from the previous three months, above the 0.1% forecast, and grew 1.3% year over year. Analysts said government spending on infrastructure and defence helped drive the recovery as private-sector momentum remained subdued.
1. Growth exceeds forecast
Germany’s gross domestic product increased 0.2% in the third quarter compared with the previous three-month period, preliminary data showed, slightly above analysts’ 0.1% forecast. The economy grew 1.3% year over year after adjusting for prices.
2. Spending supports recovery
Household and government consumption increased slightly, while export growth slowed noticeably from the first half of 2026. Analysts said higher government spending on infrastructure and defence was the main driver of the recovery; one economist said output would probably have stagnated without that impulse.
3. Investment remains a concern
Germany’s economy grew 0.3% in the second quarter and 0.4% in the first. An economist said investment would need to pick up more substantially for sustained higher growth. The government expects growth of 1.3% in 2026 and 1.1% in 2027, while the Ifo business climate index rose for a sixth straight month in October.
