Overview
- On Thursday several research institutes raised their 2026 GDP forecasts, with the Ifo Institute at 1.4 percent, the IfW and RWI at 1.3 percent, and the DIW at 1.2 percent.
- The institutes say the main drivers are unexpectedly strong exports and large government spending on infrastructure, climate and defence that have offset energy‑shock effects.
- Forecasters also now expect higher inflation of roughly 2.8–3.0 percent and project that budget deficits and the public debt ratio will climb significantly in the coming years.
- Economists warn the recovery is fragile because private consumption and business investment remain weak and external shocks, especially the Iran war and energy price swings, could reverse gains.
- The institutes will publish a joint autumn report on September 24 that will guide government budgeting and they stress much of the current growth is supported by one‑off public financing, so households may see limited relief.