Key facts
- Germany's industry association BDI has cut its 2026 growth forecast.
- The BDI now expects the German economy to grow by 0.4% in 2026.
- High energy prices, taxes, labor costs, and bureaucracy are identified as key challenges.
- The association is calling for reforms including lower corporate taxes and faster approval procedures.
- BDI President Peter Leibinger urged decisive government action to boost competitiveness.
Germany's industrial sector is facing significant pressure, leading the Federation of German Industries (BDI) to sharply reduce its growth outlook for 2026. The association now anticipates only 0.4% economic growth this year, a downgrade from its earlier 1% projection. BDI President Peter Leibinger characterized the situation as "critical, but not hopeless," emphasizing the need for decisive government action to restore the country's industrial competitiveness.
Leibinger highlighted several factors burdening Germany as a business location, including high energy prices, elevated taxes, substantial unit labor costs, and excessive bureaucracy. The association also pointed to geopolitical risks, such as the Iran war's impact on energy prices and supply chains, as contributing to the worsening conditions.