Key facts
- German economic institutes raised growth forecasts for 2026 and 2027.
- The 2026 growth forecast was increased to 1.3% from 0.6%.
- The 2027 growth forecast was increased to 1.1% from 0.9%.
- The institutes expect 0.4% growth in 2028.
- High energy prices and structural problems continue to weigh on economic activity.
Germany's leading economic institutes have raised their forecasts for the country's economic growth for 2026 and 2027, signaling a more robust performance than previously expected. The revised projections indicate a growth of 1.3% for 2026, up from an earlier forecast of 0.6%, and 1.1% for 2027, an increase from the previous 0.9% projection.
Despite the improved outlook, Oliver Holtemoeller from the Halle Institute for Economic Research (IWH) noted that the recovery is built on a narrow foundation, with high energy prices and structural issues continuing to impede economic activity. The institutes anticipate a slower growth rate of 0.4% in 2028.
The sluggishness of the German economy has been a significant factor in recent regional elections, which saw substantial gains for far-right and far-left parties. While sentiment indicators are showing improvement, recent hard economic data have been weaker, and the recovery saw a temporary slowdown in the third quarter. These forecasts are a collaborative effort by five prominent economic institutes: RWI in Essen, the Ifo institute in Munich, IfW in Kiel, IWH in Halle, and DIW in Berlin.