The German government raises its economic growth forecast for 2026

Berlin, October 8 (Xinhua) -- The German federal government released its autumn economic forecast on the 8th, expecting the German economy to grow by 1.3% in 2026, a significant increase from the 0.5% growth forecast for spring in April this year.

The report points out that the Iran War and the significant increase in energy prices initially had a clear impact on the German economy, but the resilience of the German economy was stronger than previously expected. Among them, export growth, government investment, and increased defense spending are the main factors driving economic growth.

The report also predicts that the German economy will grow by 1.1% in 2027 and only by 0.6% in 2028.

The report suggests that the future trend of the German economy largely depends on the development of geopolitical conflicts in the Middle East and Ukraine. If these crises can be sustainably resolved, energy prices are also expected to decrease, thereby accelerating the pace of economic recovery. On the contrary, if prices continue to remain high, it will continue to burden businesses and private households.

German Federal Minister of Economy and Energy, Katerina Reicher, stated that Germany has emerged from an economic downturn. The key now is to transform economic recovery into a driving force for sustained growth. Therefore, Germany needs to further promote reforms.

In response to the German government's upward adjustment of economic growth expectations, the German business community warns against excessive optimism. The head of foreign trade at the German Chamber of Commerce and Industry, Volk Trier, stated that Germany's export growth still lacks endogenous momentum. The uncertainty of trade policies and the structural disadvantages faced by Germany as an investment and production base are once again dragging down the development of the export industry.

Helena Melnikov, General Manager of the German Chamber of Commerce, pointed out that the current economic recovery mainly relies on the growth of exports to the EU's internal market and government spending through debt financing. Without substantial economic policy reforms, this round of recovery will be difficult to sustain.