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Ifo institute raises German growth forecasts due to new government plans
Published by Global Banking & Finance Review®
Posted on June 12, 2025
2 min readLast updated: January 23, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on June 12, 2025
2 min readLast updated: January 23, 2026
The Ifo institute raised German growth forecasts, citing new government measures and spending plans to boost the economy.
By Maria Martinez
BERLIN (Reuters) -The Ifo institute on Thursday raised its forecasts for the German economy for this year and next, expecting new government measures and a spending surge to boost the anaemic economy.
The economic institute said it expects 0.3% growth this year, up from the 0.2% previously forecast. For 2026, Ifo foresees 1.5% growth, up from the 0.8% expected in its spring forecasts.
"The crisis in the German economy reached its low point in the winter half-year," said Timo Wollmershaeuser, head of forecasts at Ifo. "One reason for the growth spurt is the fiscal measures announced by the new German government."
The German cabinet approved a 46-billion-euro ($52.94 billion) tax relief package last week to support companies and revive its sluggish economy from this year through 2029.
Germany's parliament also approved plans for a massive spending surge in March, including a 500-billion-euro infrastructure fund and largely removing defence investment from the rules that cap borrowing.
In its economic forecast, the Ifo institute estimates a boost of 10 billion euros in 2025 and 57 billion euros in 2026 from these measures.
As a result, growth is likely to be 0.1 percentage points higher this year and 0.7 percentage points higher next year, compared with a scenario without the government economic plans.
(Reporting by Maria Martinez, Editing by Rachel More)
The Ifo institute expects a growth of 0.3% for Germany this year, up from the previously forecasted 0.2%.
The German cabinet approved a 46-billion-euro tax relief package to support companies and a 500-billion-euro infrastructure fund.
The Ifo institute estimates a boost of 10 billion euros in 2025 and 57 billion euros in 2026 from the new measures.
The Ifo institute stated that the crisis in the German economy reached its low point in the winter half-year.
The growth projection for next year is likely to be 0.7 percentage points higher due to the government economic plans.
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