The German government has revised its economic outlook upward, anticipating a modest expansion in 2025 and stronger momentum in 2026. Previously, officials had projected no growth for 2025, but the updated forecast now estimates a 0.2% increase in GDP. The projection for 2026 has also been raised from 1% to 1.3%. n nOfficials anticipate that after two consecutive years of economic contraction, a gradual recovery will begin in the latter half of 2025. The administration expects internal economic activity to gain traction by the end of that year, bolstered by federal fiscal and economic initiatives. n nLooking ahead to 2027, growth is projected to reach 1.4%. A significant portion of this anticipated expansion is expected to stem from increased public spending, particularly through dedicated infrastructure funds and higher defense expenditures, according to Economy Minister Katherina Reiche, who presented the updated figures at a press briefing. n nDespite the optimistic revision, some analysts have raised concerns about the reliance on public borrowing to finance the projected growth. Reiche acknowledged the importance of structural reforms, emphasizing the need to reduce energy costs and ease the tax burden to stimulate private sector activity. n nShe stressed the necessity of bold policy decisions, stating, “We need the courage to take decisive reforms.” n nGermany’s industrial base, especially its manufacturing industry, continues to face challenges due to elevated energy prices, intensified international competition, and recent U.S. tariffs on European goods. Data released earlier Wednesday revealed a notable drop in industrial output during August, with the automotive sector hit particularly hard by growing competition from Chinese manufacturers. n— news from DW
— News Original —
Germany raises economic growth projections – DW – 10
The German government on Wednesday increased its growth forecasts, saying it expected economic growth to narrowly avoid stagnation in 2025 before enjoying more pronounced growth in 2026. n nThe last government projection in April predicted zero growth for 2025 for Europe ‘s largest economy, but this has been upgraded to 0.2%, with the estimate for 2026 raised from 1% to 1.3%. n n”After two years of shrinking economic performance, a light, low-level recovery is expected for autumn 2025,” read a government statement. n n”By the turn of the year 2025/26, the internal economic dynamic should pick up speed, supported by financial and economic measures taken by the federal government.” n nGrowth comes from state financing n nFor 2027, Germany is even predicting 1.4% growth. n n”A substantial part of growth in the coming years will be a result of higher state financing, in particular from the special funds for infrastructural investments and increased investment in defense,” Economy Minister Katherina Reiche told a press conference on Wednesday, presenting the projections. n nHowever, the government projections have also come under criticism for essentially being financed by taking on public debt n nReiche also pointed to the need to lower energy prices and lower taxes in order to spur further growth. n n”We need the courage to take decisive reforms,” she said. n nGermany ‘s manufacturing sector has been struggling under the weight of high energy prices, fierce foreign competition and the effects of new US tariffs on EU products. n nEarlier on Wednesday official data showed a sharp decline in industrial production in August, particularly in the automotive sector, which is facing stiff competition from China in particular. n nEdited by: Wesley Rahn