German government cuts growth forecasts for 2026 and 2027 The German government has revised its economic outlook, cutting growth forecasts for 2026 and 2027 amid ongoing economic headwinds, according to recent reports. The adjustment comes as Germany continues to navigate challenges including weak export demand, persistent inflationary pressures, and the lingering effects of global trade tensions. Officials cited a deteriorating external environment and subdued domestic investment as key factors behind the downward revision. According to the International Monetary Fund’s latest World Economic Outlook, Germany’s growth is now projected at 0.8% for 2026 and 1.2% for 2027, representing a 0.3 percentage point reduction for both years compared to earlier estimates. Goldman Sachs Research, in its January 2026 German Economic Outlook, had previously forecast 1.1% growth for 2026, citing expansionary fiscal policy as a key driver expected to boost domestic demand. The report noted that manufacturing, which has long been a drag on growth, showed signs of stabilization, though Chinese competition continued to weigh on exports. Earlier in December 2025, leading German economic institutes had already slashed their 2026 growth forecasts, stating that their projections were significantly below the government’s own expectations of 1.3% for 2026 and 1.4% for 2027. The institutes pointed to weak industrial output and declining orders as major concerns. The German economy expanded by just 0.3% in 2025, marking the sixth consecutive year of near-stagnation since 2018. Policymakers have emphasized that recent fiscal measures—including amendments to the debt brake to allow higher defense and infrastructure spending—are intended to stimulate demand and support a recovery in 2026. Despite these efforts, analysts warn that external risks, particularly from U.S. Tariffs and slowing Chinese demand, could continue to hinder export-oriented sectors, which remain central to Germany’s economic model.
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