Germany cuts 2026 growth forecast amid modest economic recovery

Germany’s economic outlook remains fragile as the Council of Economic Experts warns of slow growth and limited effects from government spending programs.

The German Council of Economic Experts has lowered its growth forecast for 2026 to 0.9%, citing limited impact from Chancellor Friedrich Merz’s fiscal reforms and ongoing stagnation in private investment and exports. Despite a slight upward revision for 2025 to 0.2%, the council warned that the German economy continues to face challenges after two years of recession.

The council noted that only a small portion of the government’s 500 billion-euro infrastructure and climate fund will count as additional investment, with much of the spending used for day-to-day expenses rather than growth-boosting projects. Experts also criticized certain government measures, including pension supplements for parents, reduced VAT in hospitality, and diesel subsidies for agriculture, as insufficient to drive long-term economic expansion.