German economy grows by 0.2% in second quarter, beating expectations
Overview of Germany's Economic Performance in Q2
By Maria Martinez
BERLIN, July 30 (Reuters) - Germany's gross domestic product grew more than expected in the second quarter despite rising prices due to the Iran conflict.
GDP Growth Figures and Euro Zone Comparison
Gross domestic product expanded by 0.2% compared with the previous three-month period, preliminary data from the statistics office showed on Thursday. Analysts polled by Reuters had forecast a rise of 0.1%.
Separate data showed that GDP grew by 0.2% in France and Italy and by 0.7% in Spain, suggesting activity in the euro zone held up well in the second quarter.
Revised Growth and Recent Economic Trends
GOOD NEWS AHEAD
The German economy grew by a revised 0.4% in the first quarter, up from the 0.3% previously announced. It has been expanding modestly for the last three quarters, following two quarters of stagnation in 2025.
Government Reforms and Business Sentiment
At the start of July, Chancellor Friedrich Merz outlined a package of pension, tax and labour reforms to boost growth, jobs and competitiveness after years of meagre economic growth.
Economists say the reforms could lift Germany's sluggish growth rate, and German business morale improved more than expected in July, reflecting hopes for the reform package.
The improvement in the Ifo economic institute's business climate index points to the recovery continuing in the second half of the year, Ifo economic chief Timo Wollmershaeuser said.
Sector Performance and Contributing Factors
"Some industrial sectors benefited from the fact that Asian competitors were hit harder by the closure of the Strait of Hormuz," said Carsten Brzeski, global head of macro at ING.
Exports were up compared with the previous quarter, driving the increase, the statistics office said.
However, household consumption showed a subdued trend and investment declined compared with the previous quarter.
Risks and Outlook
Brzeski said that it was clear that the short-term outlook for the German economy is highly dependent on energy prices and the war in the Middle East as it affects both industry and households.
(Reporting by Maria Martinez, Editing by Miranda Murray)
