German Economy Shows Resilience as RWI Lifts 2026-27 Growth Outlook
RWI raises Germany's 2026 GDP forecast to 1.3% and 2027 to 1.1%, citing export rebound and fiscal support, though structural risks remain.
Germany's RWI economic institute has sharply upgraded its growth projections for Europe's largest economy, citing a stronger-than-expected recovery in the first half of the year driven by exports and higher public spending.
The think tank now expects gross domestic product to expand by 1.3% in 2026, a significant upward revision from its June forecast of 0.8%. It also raised its 2027 outlook to 1.1% growth, up from an earlier 0.8%, before predicting a slowdown to 0.5% in 2028.
The upward revision follows a similar move by the DIW Berlin institute a day earlier. Germany's economy grew by 0.3% in the second quarter, supported by a strong increase in exports, despite headwinds from higher energy prices linked to the Iran conflict and uncertainty over U.S. tariffs.
However, RWI cautioned that the recent export momentum may not last, attributing the gains to temporary factors such as a rebound after tariff-related disruptions rather than a fundamental improvement in competitiveness.
"The recovery is here, but the structural problems have not disappeared," said Torsten Schmidt, RWI's economic chief.
The institute noted that high energy costs, bureaucracy, and weak competitiveness continue to weigh on investment, while private consumption remains subdued due to labour-market uncertainty.