Germany’s government has raised its economic growth forecasts for 2026 and 2027, according to a person familiar with the draft forecasts, as the economy shows greater resilience despite inflationary pressures, energy costs and uncertainty surrounding U.S. tariffs.
Key Points
- Germany is expected to grow by 1.3% in 2026, up from an earlier 0.5% forecast.
- Growth for 2027 has been raised to 1.1% from 0.9%.
- The government expects 0.6% economic growth in 2028.
- Infrastructure and defence spending are helping support the recovery.
- Exports are expected to grow by 3.7% in 2026 before slowing in 2027.
- Inflation is projected at 2.7% in 2026 and 3.0% in 2027.
Germany Upgrades Its Growth Outlook
Germany’s government has significantly increased its economic growth forecasts for the next two years, according to a person familiar with the draft projections reported by Reuters on October 1.
The government now expects the German economy to expand by 1.3% in 2026, compared with its previous forecast of 0.5%. For 2027, growth is projected at 1.1%, up from the earlier estimate of 0.9%.
The new projections point to a stronger recovery than the government anticipated earlier in the year, when the economy was facing significant pressure from higher energy prices and geopolitical uncertainty.
What Is Driving the Recovery?
The recovery is being supported primarily by increased government spending on infrastructure and the strengthening of Germany’s armed forces. Exports are also expected to provide an important contribution to economic growth.
Exports Expected to Lead Growth
Germany’s export sector is expected to remain an important source of economic activity. The government forecasts export growth of 3.7% in 2026.
However, export growth is expected to slow to 2.1% in 2027 and 1.1% in 2028, according to the draft forecast.
Germany’s export-oriented economy remains exposed to international trade conditions, including U.S. tariff policies and developments in global demand.
Consumers Still Face Price Pressures
Despite the stronger growth outlook, household consumption is expected to remain relatively subdued.
Domestic consumption is forecast to increase by 0.8% in 2026 and 1.1% in 2027. Higher fuel prices linked to the conflict in the Middle East are also expected to continue affecting consumers.
The government expects inflation to reach 2.7% in 2026 and 3.0% in 2027, before easing to 2.2% in 2028.
Germany’s Economy Shows Resilience
The improved forecast comes after Germany’s economy grew by 0.3% in the second quarter of 2026. Several German economic institutes had already upgraded their growth forecasts before the government’s latest revision.
The stronger performance has provided evidence that government investment and improved external demand may be helping Germany recover from a prolonged period of weak economic growth.
Official Forecast Due Next Week
The German government is expected to officially present its updated economic forecasts on October 8, 2026.
The final projections will provide a clearer picture of how Berlin expects economic growth, inflation, exports and domestic demand to develop as Germany moves through 2026 and into 2027.
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