Key facts
- Nagel said order levels suggest the manufacturing recovery, led by chemicals and electrical equipment, is likely to continue.
- Nagel said the recovery is not yet broad-based, with private consumption subdued and machinery and equipment investment down in the second quarter.
- Nagel said Germany's potential growth rate remains especially low and needs labor market, energy transition and private investment reforms.
- Most major forecasters now see 2026 German growth at more than twice the Bundesbank's June forecast of 0.5%, according to the report.
Bundesbank President Joachim Nagel said on November 11 that German economic growth is likely to accelerate in the fourth quarter, with the recovery running stronger than the Bundesbank expected in the summer. "Our interim assessments point to a stronger recovery than we were expecting in the summer," Nagel told a conference in Riga. "Economic growth is likely to accelerate in the fourth quarter."
Germany, the world's third-biggest economy, has stagnated for most of the past three years as its industrial sector lost some of its competitive edge. A recovery has started to take hold in 2026, and increased government spending on defense and infrastructure has given it an additional boost, according to the report.
In June, the Bundesbank forecast growth of just 0.5% for 2026, but most major forecasters now see a rate more than twice that and expect it to hold up in the coming years, the report said. Nagel said the real surprise in 2026 was the recovery of manufacturing, especially chemicals and electrical equipment output, and that order levels suggest the trend is likely to continue.
Nagel said the recovery is not yet broad-based. "Private consumption remains subdued, and investment in machinery and equipment declined in the second quarter," he said. He also said Germany's potential growth rate remains especially low and that deep structural changes are needed to lift it, including labor market reforms as the working age population shrinks, a transition of the energy sector to carbon neutrality and ways to foster stronger private investment.