Economic Buzz: German central bank says expansionary fiscal policy supporting economic activity

Bundesbank, the German Central Bank, stated in a latest monthly update today that economic output in Germany is likely to have risen somewhat in the second quarter of 2026. In spite of headwinds created by the war in the Middle East, real GDP is likely to have increased somewhat in the second quarter of 2026 after seasonal adjustment. It noted that industrial activity remained resilient. This is borne out by the data available for April and May. Industry is benefiting from dynamic foreign demand and growing exports. Consumers were relatively unaffected by the high energy prices and associated losses in purchasing power, and look to have kept their consumer spending at least stable. Finally, expansionary fiscal policy is supporting economic activity. Overall, the current picture painted by the indicators suggests a somewhat higher underlying pace of economic growth than was expected in the Bundesbank?s June Forecast for Germany.

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