The German government has cut its economic growth forecasts for both 2026 and 2027, according to a source familiar with the matter, reflecting continued weakness in Europe’s largest economy. The revised projections show growth expectations reduced to 0.5% for 2026, down from 1.0%, and to 0.9% for 2027, down from 1.3%.
The downgrade follows similar revisions by Germany’s leading economic institutes, which have also lowered their outlooks amid rising energy costs and weakening global demand. The adjustments come as higher oil and gas prices—partly driven by geopolitical tensions linked to the ongoing Middle East conflict—continue to affect inflation and production costs across Europe.
Inflation expectations have also been revised upward, with forecasts suggesting price growth of around 2.7% in 2026 and 2.8% in 2027, compared with lower earlier estimates. Rising energy costs are expected to weigh on household consumption and limit the recovery of domestic demand.
Germany’s export-driven economy has faced persistent challenges since the pandemic, including weaker global trade, competition from China, and structural pressures on its industrial base. Analysts note that ongoing geopolitical uncertainty has further complicated prospects for a sustained recovery.
The government’s updated forecasts are expected to be officially published later this month, with policymakers closely watching inflation trends and external risks as they prepare future budget and economic plans.
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