German economic institutes lower growth outlook and raise inflation forecasts

Wednesday 01 April 2026 - 08:30

Germany’s leading economic institutes have revised down their growth projections for 2026 and 2027 while increasing their inflation forecasts, reflecting mounting economic pressures linked to rising energy costs.

According to the updated outlook, economic growth in Europe’s largest economy is now expected to reach only 0.6% in 2026, significantly lower than earlier estimates. Growth for 2027 has also been reduced to 0.9%, indicating a slower recovery than previously anticipated.

At the same time, inflation is projected to rise to 2.8% in 2026 and 2.9% in 2027, driven largely by higher energy prices. The surge in costs is tied to ongoing geopolitical tensions in the Middle East, which continue to disrupt global energy markets.

Germany has faced persistent economic challenges since the COVID-19 pandemic, including increased competition from international markets and structural pressure on its export-driven model. The recent rise in energy prices adds further strain, potentially delaying a stronger recovery.

These forecasts, prepared by a group of major research institutes, are expected to play a key role in shaping government economic planning, particularly regarding fiscal policy and tax revenue expectations.