By Hans Bentzien
DOW JONES–According to the Bundesbank, Germany’s economy grew slightly in the first quarter and could grow “at best slightly” in the second quarter. “Despite ongoing stress factors and additional headwinds from the war in the Middle East, the real gross domestic product (GDP) is likely to have increased slightly in the first quarter of 2026, seasonally adjusted,” says the Bundesbank’s current monthly report.
Looking ahead to the second quarter, from today’s perspective, there are at most signs of further, slight expansion. “On the one hand, increasingly positive impulses from the more expansive fiscal policy are likely to take effect. On the other hand, it is expected that the effects of the war in the Middle East will have a broader and more noticeable impact on the German economy,” it continues. They are particularly effective through increased energy prices, supply chain problems, increased uncertainty, increased interest rates and worsened export prospects.
According to the Bundesbank’s statement, the survey data from Ifo and S&P Global for March still showed an overall stable situation. This suggests that the negative effects of the war in the Middle East will largely only be felt later. “On the other hand, the available economic indicators for January and February indicate a slight expansion overall,” states the Bundesbank. For industry in particular, the indicator picture is somewhat better than it was a month ago.
The Bundesbank assumes that private consumption weakened in the first quarter after a strong end to 2025. “In March, it is likely that it also suffered from a noticeable deterioration in purchasing power as a result of increased oil prices.” The inflation rate is likely to remain significantly elevated in the coming months. However, the duration and extent of the inflation surge depended heavily on the further development of the conflict in the Middle East.
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DJG/hab/apo
(END) Dow Jones Newswires
April 22, 2026 06:00 ET (10:00 GMT)
