German growth forecast for 2026 sharply raised
The government and leading research institutes expect 1.3 per cent growth, but warn that the recovery remains narrow and vulnerable.
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Germany’s growth forecast for 2026 has been sharply raised. The joint autumn forecast by the economic research institutes puts growth at 1.3 per cent, while high energy prices, an ageing population and weak domestic investment constrain the outlook.
The joint autumn forecast by Germany’s five leading economic institutes estimates real gross domestic product growth in 2026 at 1.3 per cent. That is 0.7 percentage points higher than in the spring forecast. For 2027, the institutes expect growth of 1.1 per cent, and just 0.4 per cent in 2028.
The upward revision follows a stronger-than-expected first half of the year. Exports and industrial value added increased in particular. According to the institutes, global demand for artificial-intelligence applications also contributed to the recovery.
The improvement is not broad-based. Business investment and private consumption remained weak in the first half of the year. In the third quarter, growth fell back to around 0.1 per cent, according to the forecast, partly because low water levels disrupted production and transport.
The German government has also raised its own growth forecast for 2026 to 1.3 per cent, Reuters reported, citing the new government estimate. The increase follows an earlier forecast of 0.5 per cent. The government’s final publication was not yet fully available when this edition went to press.
The outlook depends to a significant extent on government spending on infrastructure and defence. This could strengthen demand, but also increase the budget deficit. The economic institutes expect the deficit to rise from 4.1 per cent of GDP in 2026 to 4.7 per cent in 2028.
For Dutch companies, the industrial component is particularly important. Germany remains an important market and link in the supply chain, but high energy prices and structural problems are weighing on energy-intensive sectors. The shrinking working-age population is also limiting future growth potential, according to the institutes.
The figures are forecasts, not measurements of final growth. New energy prices, trade conflicts, water levels or political decisions could still alter the estimate. The main point, therefore, is not that Germany is out of trouble, but that the short-term outlook is clearly less gloomy than in the spring.
One story, several perspectives
What is established
- The joint research institutes expect 1.3 per cent real growth in Germany in 2026.
- The estimate is higher than in the spring, but the institutes describe the recovery as narrow.
- Government spending on infrastructure and defence plays an important role in the outlook.
Left
Arguments The recovery should not be bought solely with defence spending and large infrastructure funds. Investment should primarily strengthen the energy transition, public services and income security, so that growth reaches households as well as businesses.
Values Social equality, public investment and a sustainable economic structure.
Consequences This may require more government spending in the short term, but could make the economy less dependent on temporary military or fiscal stimulus.
Centre
Arguments The higher forecast is welcome, but calls for realistic implementation. Germany must invest, speed up permits and at the same time safeguard the budget rules and sustainability of public finances.
Values Institutional reliability, efficiency and economic stability.
Consequences A gradual combination of investment and reform could support the recovery without creating new financial vulnerabilities.
Right
Arguments The growth shows that lower costs, improved competitiveness and less bureaucracy matter more than new structural subsidies. Government spending must not crowd out private investment.
Values Competitiveness, budgetary discipline and room for entrepreneurship.
Consequences Faster reforms could increase productivity, but spending cuts or tax relief could put public investment and social protection under pressure.
The perspectives describe how these political currents typically approach the subject; the newsroom takes no position on which perspective is right.
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The 1.3 per cent forecast by the research institutes, the underlying risks and recent economic developments have been publicly confirmed. The separate government forecast is identified as a Reuters report rather than a fully published government document.
- confirmed Germany’s joint research institutes forecast growth of 1.3 per cent in 2026. — This appears in the joint autumn forecast by the ifo Institute and the participating institutes. source
- confirmed The forecast is 0.7 percentage points higher than in the spring. — The same forecast records the upward revision. source
- confirmed The German government raised its forecast for 2026 to 1.3 per cent. — Reuters reported this, citing an informed source and the planned government publication. source
- confirmed Germany’s GDP grew by 0.3 per cent in the second quarter of 2026 compared with the previous quarter. — This appears in the publication by the German Ministry of Economic Affairs. source
Editor's note
The institutes’ forecast is fully public and confirmed. The government estimate of 1.3 per cent is based on Reuters and the supplied current headline; the full government publication was not yet available at the time of going to press.Sources
- German government to raise forecasts due to strong H1 — Reuters via Euronext
- Joint Economic Forecast Autumn 2026 — ifo Institute en Duitse onderzoeksinstituten
- Die wirtschaftliche Entwicklung im zweiten Quartal 2026 — Bundesministerium für Wirtschaft und Energie
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