Germany raises 2026 GDP forecast to 1.3% on stronger-than-expected exports and public spending
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The German government has raised its forecast for economic growth in 2026 to 1.3% from a previous 0.5%, citing stronger-than-expected economic resilience despite pressure from soaring energy prices and geopolitical uncertainty. Katherina Reiche, Germany's Minister for Economic Affairs, said in the government's autumn economic forecast report that Germany's economy, the largest in Europe, is expected to recover steadily this year, driven by exports and public spending. Reiche said the German economy expanded better than expected in the first half of 2026, even as it was affected by conflict in the Middle East and higher energy costs. However, the recovery remains uneven, with private consumption likely to stay sluggish as inflation driven by energy prices has eroded households' purchasing power. At the same time, low capacity utilisation and geopolitical volatility continue to weigh on private investment. For the longer-term outlook, the government expects growth to slow to 1.1% in 2027 and to 0.6% in 2028. The government also warned that the economic trajectory will depend heavily on the situations in the Middle East and Ukraine. A lasting end to the conflicts would help push energy prices lower and accelerate the economic recovery, but if the situations drag on, they will inevitably add further pressure on businesses and households.