Is the German economic recession coming to an end? Germany's economy records its best figures in years

The German economy is showing the first signs of a recovery after a long period of stagnation. Europe's largest economy is on track for its strongest GDP growth since 2022, as business confidence, after a long period of weakness, is finally returning.
The Federal Statistics Office announced last week that the economy grew by 0.3% in the second quarter of 2026, exceeding expectations and continuing in line with the solid figures of the previous two quarters.
The positive figures come at a time when negative headlines about the German economy continue to mount. Volkswagen, one of the country's most popular companies, is undergoing painful job cuts — a reflection of a nationwide restructuring in the face of Chinese competition and other global challenges.
This summer, record low water levels on major rivers such as the Rhine and Danube have severely hampered trade and economic activity, while the war in Iran is further driving up energy prices. One reason for this recovery, however, lies precisely in the way the German economy has coped with some of these challenges, especially the closure of the Strait of Hormuz as a result of the war in Iran.
Germany's exports and industrial base have driven GDP growth: new orders rose for the third consecutive month, bringing the strongest output growth since the beginning of 2022.
Analysts also think that the government led by Friedrich Merz deserves some of the credit for this turnaround, even though its popularity fell to a historically low level in 2026.
The government's economic plans rely on a €500 billion infrastructure investment program, a massive increase in defense spending, and a broad package of reforms to boost competitiveness.
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