The German government has revised down its near-term economic projections, cutting growth forecasts for both 2026 and 2027 as international trade conditions have become more uncertain.
In its annual economic report, the government pared back its forecast for 2026 to 1.0% from an earlier estimate of 1.3%. The revised projection still marks a marked improvement compared with the 0.2% expansion recorded in 2025, which followed two consecutive years of contraction.
The report quotes the economy ministry directly:
"The cyclical recovery is being supported by stronger domestic momentum, while external headwinds are easing somewhat."
For 2027 the government now anticipates growth of 1.3%, down from the previous expectation of 1.4%.
The paper also highlights the role of fiscal policy in the coming year. According to the report, government fiscal measures on their own are expected to add roughly two-thirds of a percentage point to GDP growth in 2026.
A central element of the fiscal strategy is a large special fund for infrastructure approved by parliament in March with a headline size of €500 billion. That initiative is intended to support investment, but its early implementation has been limited: by the end of the year only €24 billion of the fund had been invested. The report notes this slow pace as reflective of decision-making dynamics within Germany's federal system.
The combination of a downgraded growth outlook, an active fiscal stance and sluggish initial deployment of infrastructure funds frames a cautious near-term picture. Domestic demand appears to be the engine of recovery, while the outlook remains sensitive to developments in international trade and the speed at which planned public investment is realised.
Further details on specific sectoral effects are not provided in the report; the document confines itself to the aggregate forecasts and the broad fiscal context described above.
Bottom line: Growth forecasts for 2026 and 2027 were trimmed due to greater uncertainty in international trade, even as domestic momentum and fiscal measures - including a major infrastructure fund - are expected to support the recovery.