German Economy: More Signs of Life

Germany's economy is gaining momentum with 0.8% GDP growth expected in 2026, driven by a record surge in manufacturing and defense orders. Despite headwinds in the automotive and chemical sectors, the labor market is stabilizing.

Key Takeaways

• 1.The German economy is showing signs of recovery with GDP growth projected to accelerate from 0.3% in 2025 to 0.8% in 2026.
• 2.Manufacturing orders saw a massive surge in Q4 2025, primarily driven by domestic bulk orders for defense and infrastructure.
• 3.The labor market appears to be stabilizing, with a significant slowdown in the rise of unemployment and a slight uptick in job vacancies.

Table of Contents

• The stimulus is arriving
• Investing into the Bundeswehr
• The strength at home
• Braving the headwinds from overseas
• Labour market close to the bottom?
• German outlook
• Towards peak growth in 2027

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