Overview
- On Wednesday and Thursday, the OECD raised its 2026 forecast for Germany to 1.1 percent and the five leading German research institutes lifted theirs to 1.3 percent, reversing much of the spring downgrade.
- Both organizations say the near‑term improvement is driven mainly by unexpectedly strong exports — notably electronics tied to global AI investment — plus rising public spending on infrastructure and defence.
- Forecasters stress the recovery is narrow and fragile because its path depends on how the Middle East conflict evolves, whether energy markets stabilize, weather shocks such as El Niño, and whether AI investments deliver expected returns.
- The OECD urged structural reforms to boost long‑term growth, including cutting administrative burdens, easing competition barriers, and changing tax and transfer incentives such as reforming Ehegattensplitting and tightening Minijobs rules.
- Research institutes warned the current upswing is partly debt‑financed and flagged growing deficits and weak medium‑term prospects — they project growth near 0.4 percent by 2028 and call for fiscal consolidation to avoid rising debt costs.