The GERMAN ECONOMIC MINISTRY has increased its 2026 GDP forecast by 80bp to 1.3%.

This confirming reports from last week. In some respects this is old news given the more 'resilient than previously anticipated' growth realisation since the start of the Gulf conflict. This has been driven by government spending and exports, both benefitting the industrial sector as in part energy-intensive output has been in demand due to low inventories.

It is also why this morning's weak (adjusted) NOMINAL EXPORTS for August put a stop to some of the euphoria about economic resilience after yesterday's strong IP. This isn't surprising when tradeable goods are a significant element of economic output and external demand is seen to be weakening. Adjusted cash exports dropped 0.8% m/m with the main weight coming from the US (-6.3% m/m) although this from the July's record high and is +22.6% y/y. China was an upside at 4.9% m/m but so were IMPORTS, up a mighty 11% m/m contributing to the overall +0.9% m/m inflow.

This all left the surplus at a narrower Eur 19.9bn. In REAL terms, the surplus also shrank, by Eur 1.4bn to Eur 17bn, but it is still close on +Eur4bn versus June and the July-August average remains higher than not only Q2 but H1 which suggests trade might still be growth additive over Q3. Real exports still fell, but so did imports (although that is not necessarily a positive if input demand from industry was weakening).

In other words, the situation isn't necessarily as gloomy as the nominal trade figures initially suggest. And, there is a certain optimism (hope) that the August drop was down to low river levels that limited water borne transportation.

TRUCK TOLL data does paint a positive picture for September, though. The correlation with actual output is more directional than the level, thus, there the +0.8% m/m toll mileage is at least suggestive of another month of manufacturing growth. Some caution warranted, however, given this might turn out to be a reflection of more goods on the road versus water. July's +0.7% m/m services sector turnover a positive, though.

Retail sales have been volatile but overall July's sharp retracement from the cyclical high level looks as though it will weigh in Q3 at least (sentiment remains weak as well) and runs the risk of a weaker trend emerging versus late H1's surge. The Economic Ministry is not expecting much from private consumption this year, despite improved real wages.

The market had already raised its 2026 growth forecast to 1% mid-September which the same rate as the Bundesbank Chief mused last Friday. This is double BuBa's last official forecast (which was included in the September ECB forecasts?). Still some 30bp below the new Econ Ministry outlook. There might be the prospect of the market nudging higher in the near-term.

Nobody is trying to gloss over the significant economic and political issues, internal and external.

Reports indicate yesterday's coalition leadership meeting resulted in the Chancellor admitting that the reform package will not be fully implemented until the spring, rather than the original timeline of year-end. The package was agreed in July.

Could a weaker Euro help? It might ex-EMU, although this is where a large part of the external pressure is coming from (Berlin and Paris urging the EU to get 'tough' here). And, 7% or so of German exports go to France where from fiscal problems are weighing on the single currency ego, weakness in France will impact Germany.

Resilience remains the name of the game.