The German economy expanded slightly more than previously estimated in the second quarter of the year, owing to strong exports, official data showed Tuesday, thus weathering the turmoil unleashed by the U.S.-Iran war better than feared.
Gross domestic product (GDP) grew 0.3% from April to June compared with the first three months of the year, according to revised data from the statistics office, Destatis.
A first estimate in July had put growth at 0.2%, after expansion of 0.4% in the first quarter.
"The German economy is maintaining the growth momentum seen at the start of the year," said Destatis's chief, Ruth Brand, adding that "growth was primarily driven by the positive development of exports."
The revision to second-quarter growth is another sign that the eurozone's manufacturing powerhouse could be weathering the energy shock unleashed by the U.S. and Israel's war against Iran better than feared.
Factory output and exports have also been up in recent months despite the fallout from the conflict.
The closely watched ifo business confidence survey released Tuesday rose for the fourth time in a row in August, to 88.8 points, its highest level in over a year.
The increase beat analyst expectations and was a "huge surprise," said Frank Brandmaier, an analyst at the bank KfW, adding that it was the latest piece of data to "suggest that the overall positive trend is continuing."
'More resilient than feared'
The revised GDP data showed that exports rose 2% in the second quarter from the first, while imports were also up substantially.
Investment fell slightly, dragged down by a hefty fall in the machinery and equipment sectors. Spending by both households and governments registered a small increase.
The German economy has stagnated for several years due to high energy costs, growing competition from China and U.S. President Donald Trump's tariffs.
Hopes had been high at the start of the year that it would stage a strong rebound thanks to Chancellor Friedrich Merz's spending blitz on defense and infrastructure.
The outbreak of the Middle East war has dimmed those expectations after the hit to energy-intensive manufacturers, with the government now expecting growth of just 0.5% for 2026 as a whole.
The revision of GDP data "is clearly good news," ING bank analyst Carsten Brzeski told Agence France-Presse (AFP), adding that "it shows that the economy has been more resilient than feared."
"It also shows that German industry benefited from the fact that Asian competitors suffered more from the war in the Middle East than they themselves. Some industrial orders were actually reverted from Asia to Germany," he said.
Brzeski warned, however, that Germany faced other problems, from high global energy prices to low water levels on major rivers after months of drought that have hampered cargo transport.
He also warned that Merz's government must push through a raft of reforms it has promised, from social welfare overhauls to efforts to ease bureaucratic hurdles and other burdens on business.
"Looking ahead, the low water levels, the continued high oil prices and the political struggle to really implement the announced reforms are clear headwinds for German growth," Brzeski said.