Germany's IW institute triples growth forecast for 2026

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September 20, 2026 2:03 AM EDT

The sun sets behind the skyline and the headquarter of the European Central Bank (ECB) in Frankfurt, Germany, April 6, 2025. REUTERS/Kai Pfaffenbach

By Maria Martinez

BERLIN, ‌Sept 20 (Reuters) - ​Germany's ​economy is set to grow by nearly 1.2% in 2026, helped by ‌stronger exports and government spending in the first ⁠half, according to new forecats by the German ‌Economic Institute (IW) seen by Reuters ‌on Sunday.

IW had projected growth of only 0.4% in its previous forecasts published in ​May.

The economic institutes Ifo, DIW, RWI and IMK have also recently raised their forecasts, ⁠following a stronger-than-expected first half of the year.

IW warned that momentum ​would fade in the second half as high energy prices, weak private investment ​and job losses weigh on ‌demand.

IW forecast slower growth of nearly 1% in 2027, saying consumption and ⁠investment would each contribute about half of the expansion.

IW said real exports would rise 2.8% this ⁠year and imports 2%, after goods exports rose sharply in ​the second quarter, partly because of inventory effects.

It cautioned that the boost in exports was likely temporary and ‌structural pressures, including high production costs, protectionism and Chinese competition, remained.

Private consumption ‌is expected to increase only 0.3% in ⁠2026, as inflation of ‌more than 2.5% ​erodes purchasing power.

(Reporting by Maria Martinez, Christian Kraemer and Rene WagnerEditing by Ludwig ‌Burger)


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