The German economy is expected to grow only moderately over the next two years. According to the latest forecasts from the ifo Institute, gross domestic product (GDP) is set to rise by 0.8 per cent in 2026. The Munich-based economic researchers also anticipate economic growth of 0.8 per cent for 2027.
The ifo Institute has thus revised its previous estimate for 2026 significantly downwards. Its previous forecast had predicted growth of 1.2 per cent. This adjustment highlights that the economic recovery in Germany continues to proceed at a slower pace than was assumed just a few months ago.
Despite the downward revision to the forecast, however, economists do not currently foresee a renewed recession. Instead, a scenario of moderate but stable growth is emerging. The German economy would thus expand again, albeit at a pace significantly below previous growth rates.
For businesses, the current forecast means, above all, ongoing uncertainty in planning. On the one hand, the low growth signals a stabilisation of the economic situation; on the other hand, the economic environment remains challenging. Investment decisions, transformation projects and the further digitalisation of business processes are therefore likely to continue to be made with a view to prudent resource planning.
Nevertheless, the forecast growth could still present opportunities, particularly for technology-oriented companies and providers of security and digitalisation solutions. In an environment of limited economic momentum, investment in efficiency gains, automation and resilience is becoming increasingly important. Companies are increasingly turning to technologies that reduce costs, optimise processes and enhance resilience to external risks.
The latest ifo forecast thus paints a picture of an economy that is gradually stabilising but remains characterised by structural challenges. Rather than a strong upturn, economic researchers expect Germany to experience a phase of moderate growth in 2026 and 2027, without slipping back into recession.
