Germany 2026 Growth Forecast Rises, Momentum Weakens

Germany’s economic outlook has improved after stronger exports and increased government spending on defense and infrastructure, with the German Economic Institute raising its 2026 growth forecast from 0.4% to about 1.2%. The recovery remains uneven: exports, corporate earnings expectations and defense-related industries are strengthening, while infrastructure investment is advancing slowly and traditional manufacturers continue to face pressure. Economists warn that growth could lose momentum in the second half of 2026 as inventory-driven export gains fade, energy costs weigh on household consumption, and private investment and construction remain weak. Consumer confidence and political stability also remain fragile, leaving uncertainty over whether the improvement will develop into a durable recovery; the institute expects 2027 growth to remain below 1%.