Economic forecast
Ifo Institute raises growth forecast
The Ifo Institute has revised its economic forecast for Germany upwards. The German economy is expected to grow by 0.3% in 2025 and 1.5% in 2026. Compared to the spring forecast, the growth rates have been raised by 0.1 and 0.7 percentage points respectively.
"The crisis in the German economy bottomed out in the winter half-year," says Ifo economic researcher Timo Wollmershäuser. "One reason for the growth spurt is the fiscal measures announced by the new German government." In the first quarter of 2025, economic output had already grown strongly by 0.4 percent. According to the Ifo Institute, this was mainly due to exports to the USA being brought forward. However, private consumption and investments also increased again. At the same time, the mood among companies has brightened since the beginning of the year. "The increasing optimism is probably also due to the hope that the new coalition will end the economic stalemate and that an agreement will be reached in the trade dispute with the USA," says Wollmershäuser.
The new German government plans to expand infrastructure and defense spending as well as provide relief through accelerated depreciation, tax cuts, lower network charges and a higher commuter allowance. In its economic forecast, the Ifo Institute estimates the stimulus at 10 billion euros in 2025 and 57 billion euros in 2026, which should boost growth by 0.1 percentage points this year and 0.7 percentage points next year.
The economic researchers see risks in US trade policy. The import tariffs already imposed - assuming they remain at their current level - will impact economic growth by 0.1 percentage points in 2025 and 0.3 percentage points in 2026. If an agreement is reached in the trade conflict, growth in Germany could be higher, while an escalation could lead to a renewed recession.
According to the Ifo forecast, the inflation rate will be 2.1% in 2025 and 2.0% in 2026. The labour market is expected to stabilize. The unemployment rate will rise to 6.3% in 2025 and fall slightly to 6.1% in 2026.
You might also be interested in
Why the crisis continues
How deep is Germany's chemical industry really in crisis in 2026? After a weak start to the year, burdened by the conflict in the Middle East, high energy costs and global competitive pressure, the German Chemical Industry Association (VCI) paints a...
read more...Stratasys takes over MarkForged
Stratasys is acquiring MarkForged from Nano Dimension for USD 42.5 million, thereby expanding its portfolio in the field of fiber-reinforced composites. The acquisition also strengthens the company's software and materials expertise in industrial 3D...
read more...Wittmann reorganizes the management
Wittmann reorganizes the management team: From May 2026, owners Michael Wittmann and Dr. Werner Wittmann will combine the management of the entire group of companies in a dual leadership team. Rainer Weingraber is leaving the company.
read more...Electricity price subsidies decided
Industrial electricity price is coming, VCI warns of limited effect
The EU Commission has approved the German industrial electricity price: Until the end of 2028, electricity costs for energy-intensive companies can be subsidized with 3.8 billion euros and capped at five cents per kilowatt hour. The VCI criticizes...
read more...Industry insists on reforms before EU Council
At the European Industry Summit in Antwerp, companies and associations called for concrete, measurable steps towards greater competitiveness in Europe. VDMA, VCI, Plastics Europe, ZVEI, BDI and VDA also called for speed in reducing bureaucracy,...
read more...50 years of Plagiarius: How brazen product counterfeiting damages innovation
For the 50th time, the "Plagiarius" award ceremony is bringing brazen product copies into the public eye. The negative award highlights the extent of the economic, security-related and social damage caused by product and brand piracy and why the...
read more...ifo Institute lowers growth forecast
How much will the German economy grow in 2026?
The ifo Institute is revising its economic forecast downwards: It expects growth of just 0.1% in 2025 and 0.8% in 2026. The reasons for this are structural change, bureaucracy and US tariffs.
read more...Supply Chain Act: No German special path
17 Business associations demand suspension of the LkSG
German companies fear competitive disadvantages due to the national Supply Chain Due Diligence Act (LkSG). 17 business associations are calling for the law to be suspended and for the national scope of application to be adapted to the EU CSDDD...
read more...German exports: sentiment improves, upward trend fails to materialize
Sentiment in the German export industry brightens slightly: Ifo export expectations rise to -1.2 points in January 2026. The automotive and electrical industries in particular expect exports to grow.
read more...