Overview
- This week the OECD raised its 2026 growth forecast for Germany to 1.1 percent and kept its 2027 forecast at 1.1 percent.
- Germany’s five leading research institutes lifted their joint 2026 projection to 1.3 percent and put 2027 at about 1.1 percent while warning growth would slow to 0.4 percent in 2028.
- Forecasters point to unexpectedly strong exports—partly from electronics and AI-related equipment—and higher public investment in defense and infrastructure as the main drivers of the revision.
- Economists caution the rebound is fragile because renewed Middle East escalation, a fresh energy shock, trade restrictions, severe climate events like El Niño, or weak returns on AI spending could quickly reverse the gains.
- The institutes stress the recovery rests heavily on debt-financed special funds, which raise deficits and create a medium-term need for fiscal consolidation and structural reforms to revive private investment and address demographic limits.