Key facts
- Germany's IMK institute more than doubled its economic growth forecast for 2026 to 1.3%.
- The institute raised its 2027 growth forecast to 1.4%.
- Stronger-than-expected exports and higher government spending on defense and infrastructure contributed to the revised forecast.
- Private consumption is expected to add 0.1 percentage point to GDP growth this year.
- Government consumption is set to contribute 0.7 points to GDP growth this year.
- IMK forecasts inflation of 2.7% in 2026 and 2.9% in 2027.
- The unemployment rate is expected to remain at 6.4% in both 2026 and 2027.
Germany's Macroeconomic Policy Institute (IMK) significantly increased its economic growth forecast for 2026, projecting a 1.3% expansion, more than double the previous 0.6% estimate. The institute also revised its 2027 growth forecast upward to 1.4% from 0.9%.
This upward revision follows a stronger-than-expected first half of the year, driven by robust exports and increased government spending on defense and infrastructure. Other economic institutes, including Ifo, DIW, and RWI, have also recently raised their forecasts.
Despite the improved outlook, IMK noted that the recovery is not yet self-sustaining. High energy prices and economic policy uncertainty continue to weigh on household consumption, which is expected to contribute only 0.1 percentage point to GDP growth this year. In contrast, government consumption, boosted by defense spending, is projected to add 0.7 percentage points.
IMK anticipates inflation to be 2.7% in 2026 and 2.9% in 2027, while the unemployment rate is expected to remain stable at 6.4% in both years.