Germany's IfW raises 2026 growth forecast as economy regains momentum
Economic Outlook and Growth Forecasts
IfW Institute Raises 2026 Forecast
BERLIN, Sept 3 (Reuters) - Germany's IfW institute on Thursday raised its 2026 growth forecast for Europe's largest economy by half a percentage point, citing growing signs that it has passed the low point of its downturn and is regaining momentum.
GDP Projections and Business Sentiment
The institute now expects gross domestic product to grow by 1.3% this year, up from a previous forecast of 0.8%, citing a noticeable acceleration in economic activity and improving business sentiment despite geopolitical headwinds.
Risks and Future Growth Concerns
However, it warned that the recovery remains on shaky ground, with risks stemming from the Iran war and fiscal stimulus set to fade in coming years.
For 2027, the institute left its previous forecast for 1.0% growth unchanged. It expects only 0.5% growth in 2028.
Structural Factors and Investment Outlook
Germany's weak performance in recent years had been driven in large part by structural factors that will continue to weigh on activity, said the institute.
Export Growth and Competitiveness
While export growth is expected to resume after sharp declines in previous years, deteriorating competitiveness is likely to lead to further losses in global market share.
Private Investment Activity
Given the challenges facing the business location, private investment activity is expected to remain subdued, it added.
(Reporting by Miranda Murray, Editing by Friederike Heine)
