The German economy might have fared better over the past months than originally anticipated, according to a monthly report by the country's central bank released on Thursday.

"Overall, real gross domestic product (GDP) could rise slightly in the third quarter of 2025 from today's perspective," the Bundesbank said in the report.

"The German economy is proving relatively robust in a difficult environment," it added.

If the forecast covering the period between July and September materializes, this would be a rare sign of relief for Europe's biggest economy, which is reeling from two consecutive years of recession.

Following an unexpected minor rebound in the first quarter of the year, Germany's GDP contracted by 0.3% in the second quarter as new US tariffs, high energy prices and continued low demand put pressure on businesses.

For 2025 as a whole, leading economic institutes predict the economy to grow by 0.3%.

While the environment for investment continues to be unfavourable in light of additional US tariffs, there are no signs of a major slowdown between July and September, the central bank said.

In another sign that an upswing might be near, industrial production started the quarter with an increase, mainly due to a rise in mechanical engineering.

Meanwhile, a decline seen in June turned out to be significantly lower than initially calculated, according to the Bundesbank.

"The underlying trend in demand for German industrial goods remains upward," the bank said.

According to its assessment, the decline in exports to the United States is also unlikely to have as strong an impact as it did in the second quarter.