Germany’s leading industry association, the BDI, announced on Monday a downward revision to its growth outlook for 2026, trimming the forecast to 0.4% from a prior estimate of 1%. The group said the adjustment reflects mounting pressures on the country’s industrial sector driven by persistently high costs, weak conditions for investment and rising geopolitical risks.
In its assessment, the BDI highlighted that conditions have deteriorated in recent months. The association specifically pointed to the Iran war and the effects it has had on energy prices and supply chains as a significant factor that has worsened the outlook.
BDI President Peter Leibinger characterized the state of German industry as "critical, but not hopeless," and urged more decisive government action to help regain competitiveness. He identified a cluster of cost-related burdens that are weighing on Germany as a location for business: high energy prices, high taxes, high unit labor costs, high non-wage labor costs, and an excessive regulatory and bureaucratic burden.
"Policymakers must deliver - consistently, reliably, and with priority given to growth," Leibinger said. "That is how investment, growth, and a new beginning will emerge."
Rather than advocating isolated interventions, the BDI called for a broad and coordinated reform package. The association spelled out several policy priorities it believes are necessary to reverse the negative trend: lower corporate tax rates, improved depreciation rules, stronger incentives for innovation, faster planning and approval procedures, and a more efficient public administration.
The BDI’s statement underscores the interplay between external geopolitical developments and domestic cost structures in shaping the near-term growth outlook for Germany’s industrial economy. The association framed its appeal as one for comprehensive, growth-oriented policy steps aimed at restoring investor confidence and competitiveness.
Summary: The BDI reduced its 2026 growth forecast to 0.4% from 1%, pointing to high costs, weak investment conditions and the Iran war’s impact on energy and supply chains. The group urged broad reforms to restore competitiveness.