The economy ministry raised its growth outlook to 1.3 percent for 2026 and 1.1 percent for 2027, saying the Iran war has hurt less than feared.
Germany's economy ministry on Thursday raised its growth forecast to 1.3 percent for 2026 and 1.1 percent for 2027. In April it had expected 0.5 percent this year and 0.9 percent next year. The ministry said the Iran war is not hurting the economy as much as feared.
Economy Minister Katherina Reiche said Germany's economy is growing and that this was an important signal, but only a beginning. She said the task now is to turn the initial recovery into genuine momentum, and that growth must become self-sustaining through further reforms.
Reuters said the upturn is driven mainly by debt-financed investment in infrastructure and the armed forces. The government expects exports to rise 3.7 percent this year, then 2.1 percent in 2027 and 1.1 percent in 2028. It sees growth slowing to 0.6 percent in 2028.
Inflation is forecast at 2.7 percent in 2026 and 3.0 percent in 2027, easing to 2.2 percent in 2028. German inflation rose to 3.3 percent in September, the highest in almost three years, Reuters reported. The government has also cut taxes on gasoline and diesel by 0.17 euros a litre from October through December.
The ministry said the outlook depends on the wars in the Middle East and Ukraine. A lasting resolution would speed the recovery, while persistent inflation could weigh more heavily on firms and households.
People Sentiments Positive
- Katherina Reiche said the economy is growing but that the recovery is only a beginning.
- She said growth must become self-sustaining and that reforms have to continue.