Bundesbank predicts likely economic contraction in the 3rd quarter

The Bundesbank forecasts a likely contraction of the German economy in the third quarter of 2026, citing temporary interruptions in economic recovery due to various factors, including the impact of the Iran conflict. The report highlights that the economic output may have decreased, influenced by the repercussions of U.S. and Israeli attacks on Iran, which negatively affected German exports and supply chains. Additionally, summer restrictions on the Rhine River navigation increased logistical costs. Despite these challenges, there are positive signs, as businesses report improved perceptions of their current situation. Future economic recovery largely depends on the developments in the Middle East conflict.