Key facts
- German government raised 2026 growth forecast to 1.3% from 0.5%.
- German government raised 2027 growth forecast to 1.1% from 0.9%.
- Government expects 0.6% growth in 2028.
- Export growth is forecast at 3.7% this year.
- Inflation is expected to reach 2.7% in 2026 and 3.0% in 2027.
The German government has revised its economic growth forecasts upward for 2026 and 2027, signaling a more optimistic outlook for Europe's largest economy. The economy ministry announced on Thursday that it now expects 1.3% growth in 2026 and 1.1% in 2027, a significant increase from the 0.5% and 0.9% projected in April, respectively. For 2028, growth is anticipated to be 0.6%.
These updated projections align with assessments from Germany's leading economic institutes. The government attributes the anticipated upturn to its own debt-financed investments in infrastructure and the strengthening of the nation's armed forces. Exports are also expected to contribute significantly, with a forecast of 3.7% growth this year, slowing to 2.1% in 2027 and 1.1% in 2028.
The improved outlook comes as Chancellor Friedrich Merz faces pressure from a sluggish economy, which proved to be a point of contention in September's regional elections, leading to substantial gains for far-right and far-left parties. The government anticipates inflation to reach 2.7% in 2026 and 3.0% in 2027, before easing to 2.2% in 2028, with the war in the Middle East primarily affecting consumers through price increases.