German Economic Institute lifts 2026 growth outlook to nearly 1.2% on exports and spending
The German Economic Institute now expects the economy to expand by almost 1.2% in 2026, driven by stronger exports and first-half government outlays.
Germany's IW institute upgraded its 2026 GDP forecast to almost 1.2%, a sharp rise from the 0.4% predicted in May, reflecting a stronger-than-expected first half. The improvement is attributed to a surge in real exports, which are expected to rise by 2.8%, and heightened government spending early in the year. However, IW warns that the export lift may be temporary and that high energy prices, subdued private investment and rising unemployment could dampen demand later in the year.
For 2027, the institute foresees a slower pace of growth, with private consumption and investment each accounting for about half of the expansion. It also notes that private consumption is projected to increase only modestly as inflation above 2.5% erodes purchasing power.
Why it matters
The revised outlook signals a more optimistic near-term German economy but highlights risks that could affect businesses and consumers.
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