The Federal Government has substantially raised its economic forecast. According to Federal Minister of Economics Katherina Reiche (CDU), who announced the “Autumn Projection” on Thursday, the price-adjusted gross domestic product (GDP) is expected to grow by 1.3 percent this year. This marks an increase of 0.8 percentage points over the original spring projection. Further projections show a GDP growth of 1.1 percent for 2027 and 0.6 percent for 2028.
Minister Reiche noted that the economic data demonstrates that the German economy has proven to be more resilient than anticipated, successfully maintaining a growth trajectory. She stated that despite conflicts in the Middle East and increasing energy prices, the economy expanded strongly during the first half of 2026. This recovery was primarily supported by exports and public consumption.
According to the Ministry, the main impetus for growth this year is expected to come from foreign trade, which benefitted greatly in the second quarter from a special development. Facing global shortages, domestic companies managed to increase inventories of energy-intensive goods.
In terms of future support, the fiscal impulses derived from special funds and defense spending are anticipated to be evident in public investment and state consumption throughout the projection period. Nevertheless, the Ministry suggests that despite continued increases in real wages, private consumption may initially remain subdued due to price rises driven by energy costs.
Private investment is also projected to recover gradually over the coming year, partly because of ongoing high geopolitical uncertainties, low capacity utilization, rising material and financing costs, and structural challenges. The overall health of economic development remains heavily dependent on how geopolitical conflicts, particularly those in the Middle East and Ukraine, unfold.
The government noted that a sustainable resolution to these crises, which would likely lead to lower energy prices, would accelerate the recovery process. Conversely, persistently high prices for raw materials and energy could place significant strain on both businesses and private households.
This Autumn Projection serves as a crucial basis for estimating taxes and for the budgetary planning carried out by regional authorities and social security institutions.
