Deutsche Bundesbank President Joachim Nagel said Germany’s growth should accelerate in the fourth quarter as defense and infrastructure outlays support demand, though weak household spending and business investment are limiting the recovery.
At the Latvijas Banka Economic Conference in Riga on Nov. 11, Nagel said the Bundesbank’s interim assessment pointed to a recovery stronger than it had expected over the summer. He offered no numerical estimate for fourth-quarter growth.
The Federal Statistical Office of Germany (Destatis) reported Oct. 30 that gross domestic product (GDP) rose 0.2% in the third quarter of 2026 from the previous quarter, adjusted for prices, seasonal effects and calendar effects. Final consumption edged up, capital formation provisionally declined, and export growth slowed from the first half of the year.
Nagel cited GDP gains of 0.4% in the first quarter of 2026 and 0.3% in the second. Manufacturing also expanded, particularly in chemicals and electrical equipment, and he said the level of industrial orders suggested that trend could continue. But consumer outlays remained restrained, while investment in machinery and equipment fell in the second quarter of 2026.
The Bundesbank’s June forecast projected calendar-adjusted GDP growth of 0.5% in 2026 and 0.8% in 2027. Nagel did not give a new annual projection with his fourth-quarter outlook. He put Germany’s potential growth rate at about 0.3% to 0.4%, pointing to demographic change, subdued investment and weak productivity growth as constraints.
Nagel said Germany had barely grown between 2019 and 2025. He linked the period’s economic strain to pandemic-era supply disruptions, higher energy costs after Russia’s invasion of Ukraine, weaker competitiveness and stronger competition from China.
Public spending is helping support demand, but Nagel said infrastructure investment would raise potential output only modestly, while additional defense spending was not expected to lift potential growth in the foreseeable future. Destatis is due to publish detailed third-quarter GDP results Nov. 25, and the Bundesbank’s next full forecast for Germany is scheduled for December.
