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Bundesbank Chief: Germany’s economy will accelerate in the fourth quarter, driven by the recovery of industry and public spending

Cristina Petrache

11 November 2026, 15:13

International

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Germany’s economy is expected to accelerate in the fourth quarter, amid a faster-than-previously estimated recovery, Bundesbank President Joachim Nagel said Wednesday at a conference in Riga. The official said interim forecasts point to a stronger rebound than anticipated in the summer.

Germany has stagnated for nearly three years, affected by a weakening industrial sector and the loss of some of its competitive advantage. This year, industry—particularly the chemicals and electrical equipment sectors—has performed better than expected, while order levels suggest the trend could continue.

However, the recovery is not broad-based. Private consumption remains weak, while investment in machinery and equipment fell in the second quarter. In June, the Bundesbank estimated GDP growth of just 0.5% in 2026.

Germany’s Council of Economic Experts also improved its forecast, mainly due to exports and public spending on defense and infrastructure. Chancellor Friedrich Merz indicated an estimate of approximately 1% for 2026. Nagel called for reforms to the labor market and energy sector, as well as measures to stimulate private investment, while experts warn that projected budget revenues could be insufficient to cover spending over the long term.

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Context: The bank and German political leaders warned before signs of recovery

Before assessments of the German economy, Deutsche Bank’s leadership warned that the rise of parties considered extremist by security authorities could discourage foreign investors and affect the economy. Christian Sewing said that investors do not always distinguish between the policies of regional governments and the economic direction at the national level, mentioning significant electoral results for the AfD in eastern states and a major victory for the Left Party in Berlin, with radical proposals regarding housing costs.

At the same time, Chancellor Friedrich Merz reaffirmed that his coalition government with the Social Democrats would continue after the regional electoral defeats. He indicated that he would discuss the next steps with the leaders of the two parties, while the Social Democrats called for a review of the executive’s position, including regarding pension reform.