Germany: Growth of 1.3% is foreseen by the government for 2026

Growth of 1.3% for 2026 and 1.4% for 2027 is expected by its federal government Germanythanks mainly to the state expenditure Infrastructure and defense, Minister of Economy Katerina Rae said earlier today (8.10.2025) and spoke of “signs of improvement” of the situation in the economy.

For this year, however, the climate remains sluggish, with a prediction of a marginally positive sign, at 0.2%. “After two years of shrinking economic production, a low economic economic recovery emerges in the fall of 2025. In changing the year, Germany’s economic production is expected to gain dynamic, backed by the federal government’s economic and fiscal policy,” the federal government said in a statement. year, from 1% to 1.3%.

As the ministry points out, the economic recovery will not come from the export sector, as was usually the case in the German economy, but mainly from domestic demand. “Stable price developments, significant wage increases, and targeted cost relief for private households will boost real income available in the coming years,” Katerina Reiche explained and, referring to government spending, noted that “he noted that”Significant part of growth in the coming years is expected to come from the State – e.g. with the Special Fund and Defense Investments. “

But even this impulse will be effective “only if investments are implemented quickly,” the minister warned, and spoke of the need for further reforms: “To reduce energy costs, to promote private investments that face high tax and tariff burden, to reduce other countries,

The Economy’s estimates were confirmed by the Federal Statistical Service, according to the data of which In August, German companies reduced their production to the highest degree since the start of the war in Ukraine In March 2022. Specifically, industry, construction and energy suppliers produced a total of 4.3% less than last month.

“This is another serious blow to the German economy,” said LBBW analyst Yen – Oliver Niclas, anticipating a further reduction in economic production for the third quarter. “Instead of autumn reforms, a winter is now threatened with our dissatisfaction,” the economist said, referring to Chancellor Friedrich Mertz’s statement on extensive reforms in the near future.

The German Industry and Chamber of Commerce (DIHK) is evaluating, for its part, as a signal of awakening that “the basic industrial sectors collapse”, among other things, the high cost of energy and labor, taxation and bureaucratic burden.

As the Chamber points out, the weak status on orders does not promise recovery soon, while the German Banks Association (BDB) estimates that next year, The government financial package will contribute up to 0.8 points to total economic growth. At the same time, the negative development of production in August this year is mainly due to the sharp decline in Germany’s largest industry, the automotive industry, “the statistical service said in its statement.

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