German GDP growth revised upwards, defying Iran war turmoil

German GDP growth has been revised upwards, surprising despite ongoing turmoil from the Iran war. According to revised data from the statistics office Destatis, the economy grew 0.3% from April to June compared to the first quarter of the year, an increase from the initial estimate of 0.2%. Destatis chief Ruth Brand explained that the growth was primarily driven by positive developments in exports.

The economy expanded by 0.4% in the first quarter, showing resilience against the energy shock caused by the US and Israel's conflict with Iran. This suggests the eurozone's manufacturing giant may be better equipped to withstand the fallout from the war than previously thought. Factory output and exports have been steadily increasing in recent months, despite the conflict's impact.

While investment slightly fell due to a significant drop in machinery and equipment, household spending and government expenditure both saw a small increase. The German economy, which has been stagnant for years due to high energy costs, intense competition from China, and US tariffs under President Donald Trump, was initially expected to rebound strongly under Chancellor Friedrich Merz's defense and infrastructure spending.

However, the war's impact on energy-intensive manufacturers has dimmed those hopes, with the government now projecting a 2026 growth rate of just 0.5%.