Germany Lifts GDP Forecast as Economy Withstands Iran War
The revised outlook reflects stronger exports and debt-financed public investment, with inflation expected to rise to 2.7% in 2026, officials said.
- On Thursday, the German government raised its 2026 economic growth forecast to 1.3%, up from 0.5% in April, as the Iran war's economic impact proved less severe than feared.
- Previous projections proved too pessimistic amid ongoing regional conflicts in the Middle East, which are affecting many consumers primarily through inflation rather than broader economic damage.
- Export growth is forecast at 3.7% this year, while inflation is expected to reach 2.7% in 2026 and 3.0% in 2027, before easing to 2.2% in 2028.
- Debt-Financed investments in infrastructure and strengthening of Germany's armed forces are driving the upturn, aligning with projections from the country's leading economic institutes.
- Chancellor Friedrich Merz welcomes the pickup, as Germany's sluggish economy proved a sore point during September's regional elections that resulted in gains for the far right and far left.
36 Articles
36 Articles
Germany lifts GDP forecast as economy withstands Iran war
The government lifted its full-year projection to 1.3 percent, up from its April forecast of just 0.5 percent. The rosier outlook could take some pressure off Chancellor Friedrich Merz, who is facing criticism he has not done enough to kickstart the long-stagnant economy. "The German economy proved more robust than projected in the spring," Economy Minister Katherina Reiche said in announcing the new forecasts. "Despite geopolitical uncertainti…
The German government has revised upwards its economic growth forecast for this year and next, as the Iran war has had less of a drag on the economy than previously expected.
The German government is much more optimistic about the German economy. For the current year, it is now expecting more than twice as much growth as in the spring.
However, the German economy has proved to be more resilient than expected. In April, Berlin had only expected an economic increase of 0.5 percent.
The consequences of the Iran war and the sharp rise in energy prices had put a significant strain on the economy at first. Nevertheless, the government is more optimistic.
The Federal Government expects growth of 1.3 percent for the current year, which makes it much more optimistic about economic development than in the spring when it expected 0.5 percent.
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