Key facts
- The ifo Institute raised its German economic growth forecast for the current year to 1.4%.
- Forecasts for 2027 and 2028 were set at 1.2% and 0.8% respectively.
- Stronger export demand and increased government spending are key drivers for the improved outlook.
- Inflation is expected to decline to 2.3% by 2028.
- The think tank will include the economic impact of hybrid attacks in future analyses.
Germany's economy is showing signs of recovery, with the ifo Institute raising its growth forecasts for the coming years. The think tank now anticipates the European powerhouse to grow by 1.4% this year, a significant upward revision from previous estimates. This optimism is supported by expectations of stronger demand from abroad and increased government investment in infrastructure, climate initiatives, and defense.
The institute projects growth to continue at 1.2% in 2027 and 0.8% in 2028. Timo Wollmershäuser, head of economic forecasts at ifo, noted improvements, particularly within the struggling industrial sector, indicating a continuing recovery.
These revised figures are more optimistic than those from Bundesbank President Joachim Nagel, who predicted around 1% growth for the current year. The upgrades also reflect updated historical data and a more positive view of the economy's underlying momentum. Inflation is expected to moderate over the forecast period, moving closer to the European Central Bank's target.
Looking ahead, the ifo Institute plans to integrate the economic implications of hybrid attacks into its future analyses, acknowledging potential disruptions to supply chains and infrastructure.