More German Economic Institutes Raise Their Growth Forecasts

Germany’s economic outlook has brightened as stronger-than-expected foreign trade led several research institutes to lift their growth forecasts.

The ifo Institute now expects gross domestic product to expand by 1.4% in 2026, while the RWI Leibniz Institute for Economic Research forecasts 1.3% growth. For 2027, ifo projects growth of 1.2% and RWI 1.1%. The institutes had previously expected Germany’s economy to grow by only 0.8% in 2026.

The Kiel Institute for the World Economy and the German Institute for Economic Research had already raised their forecasts. Researchers attributed the more optimistic assessments to surprisingly strong foreign trade and increased government spending. RWI economic head Torsten Schmidt said exports helped the German economy perform better in the first half of the year than initially expected.

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High energy prices, too much bureaucracy and weak competitiveness continue to hold Germany back.

Schmidt cautioned that the recovery had not eliminated Germany’s structural problems. “High energy prices, too much bureaucracy and weak competitiveness continue to hold Germany back,” he said.

Households have so far felt little benefit from the recovery, Schmidt added. “Exports and government spending are bringing movement to the economy, but without more private investment and consumption, the recovery remains fragile.”

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Exports and government spending are bringing movement to the economy, but without more private investment and consumption, the recovery remains fragile.