IMK Lifts Germany's 2026 Growth Forecast to 1.3% on Export Strength

Germany's Macroeconomic Policy Institute (IMK) has more than doubled its economic growth forecast for 2026, pointing to stronger-than-expected exports in the first half of the year and increased government spending on defence and infrastructure.

The institute now expects gross domestic product to expand by 1.3% in 2026, up from its earlier projection of 0.6%. For 2027, it forecasts growth of 1.4%, compared with a previous estimate of 0.9%.

The revision follows similar upward adjustments by the economic institutes Ifo, DIW and RWI, which have also raised their forecasts after a stronger-than-anticipated first half.

"Germany as a business location is more resilient than many recent dire predictions would suggest," IMK's Sebastian Dullien said.

Dullien cautioned, however, that the recovery is not yet self-sustaining. High energy prices and uncertainty over economic policy are weighing on household consumption, he said.

Private consumption is expected to contribute only 0.1 percentage point to GDP growth this year, while government consumption — including additional spending on the armed forces and ammunition — is set to add 0.7 points, the institute said.

IMK forecast inflation of 2.7% in 2026 and 2.9% in 2027. It expects the unemployment rate to remain at 6.4% in both years.