German Economic Data to Test Sustainability of Recovery from Stagnation

Germany will release critical economic indicators in the coming days that will reveal whether Europe's largest economy is staging a durable recovery or remains constrained by structural weaknesses and trade tensions. The Ifo Institute's business climate index is due February 23, followed by detailed fourth-quarter GDP data on February 25. Preliminary data shows Germany exited stagnation with 0.3% GDP growth in Q4 2025, driven by household and government spending. Manufacturing activity expanded for the first time since 2022, while factory orders surged in December. Bloomberg Economics projects modest quarterly growth of 0.2% in Q1 2026 and 0.3% in Q2, with annual growth reaching 0.8% for 2026. Chancellor Friedrich Merz faces mounting pressure to deliver on promises to cut bureaucracy as increased public investment in infrastructure and defense begins to flow through the economy.