German government to raise forecasts due to strong H1, source says

German Government Increases Economic Forecasts After Strong H1 Performance

Updated Economic Outlook and Contributing Factors

By Holger Hansen

Stronger Than Expected First Half Drives Forecast Revision

BERLIN, Oct 2 (Reuters) - The main driver behind the German government's raised economic forecasts is an unexpectedly strong performance of the German economy in the first half of the year, a government source told Reuters on Friday. 

Challenges in Economic Recovery

"The economic recovery still lacks a broad base: private consumption and corporate investment are developing only sluggishly, while structural problems affecting Germany as a business location persist," the source said.

Details of the Revised Forecasts

Growth Projections for 2026 and 2027

A person familiar with the draft told Reuters on Thursday that the government raised the growth forecast to 1.3% in 2026 and 1.1% in 2027. It had expected 0.5% growth for 2026 and 0.9% in 2027 in its April forecasts.

Alignment with Economic Institutes

The new government forecasts - which will be published on October 8 - are in line with those of Germany's leading economic institutes, which were published at the end of September.

The economy ministry directed Reuters to the release scheduled for next week and declined to comment further.

Impact of Fiscal Measures and Future Outlook

The fiscal measures introduced so far are expected to raise GDP by 1% by the end of 2027, according to the source. 

For 2028, the government expects growth of 0.6%.

Role of the Public Sector in Growth

The public sector will remain a driver of growth, although to a lesser extent than in previous years, the source said about 2028. 

(Reporting by Holger Hansen, writing by Maria MartinezEditing by Ludwig Burger)