Germany: Growth Recovery Remains Moderate – Commerzbank

The German economy is showing greater resilience than expected. Commerzbank analysts Dr. Ralph Solveen and colleagues state that German GDP has grown by approximately 0.35% per quarter over the past three quarters, with the main driver of this moderate recovery being stronger exports to EU partner countries.

**Export-Driven Growth, Domestic Demand Still Under Scrutiny**

From a structural perspective, external demand has become a key stabilizer for the German economy in recent times. The analysts explicitly note that exports to EU partners are the core factor underpinning the upside surprise in GDP. This has partially offset potential weakness in German domestic demand, preventing a sharper decline in the overall economy amid a complex global environment. However, this reliance on external demand also implies that the health of the eurozone's internal economy will directly impact the sustainability of Germany's recovery.

**Manufacturing Orders Rebound, Industrial Outlook Turns More Optimistic**

Beyond GDP data, the latest manufacturing orders indicators also corroborate the moderate recovery. Dr. Marco Wagner of Commerzbank points out that German manufacturing orders rose by 1.9% month-on-month in May, and even excluding the impact of large-scale orders, the increase stood at 1.0%, signaling a clear upward trend. The bank believes this improvement will support a gradual recovery in German industry after a prolonged period of stagnation. Based on this, Commerzbank forecasts that the German economy will see a slight uptick in the second quarter after possibly recording a minor decline.

**Cautious Outlook Amid a Moderate Tone**

Overall, Commerzbank's assessment of the German economy consistently revolves around a "moderate" theme. The bank has not altered its overall cautious stance due to the positive short-term data, and its forecasting framework indicates that despite positive signals in the industrial sector, the momentum of the overall economic rebound will be limited. Market reports show that the bank has also maintained its economic growth expectations for the full year 2026, suggesting it views the current recovery process as slow and gradual.