German economy projected to grow just 1% in 2026, chamber warns

Tuesday 17 February 2026 - 14:00

By: Sahili Aya

German economy projected to grow just 1% in 2026, chamber warns

Germany’s economy is projected to grow by only 1% in 2026, according to the German Chamber of Industry and Commerce (DIHK), slightly above its earlier forecast of 0.7%. The chamber emphasized that structural reforms are essential to achieve a more sustainable recovery.

Helena Melnikov, managing director of DIHK, noted that Germany’s growth remains slow compared to international peers, with the country showing just 0.2% growth since 2019, while the U.S. and global economies expanded by 15% and 19%, respectively.

Challenges such as geopolitical uncertainty, high operating costs, and weak domestic demand continue to hinder companies. The DIHK’s business climate index, based on 26,000 firms nationwide, rose modestly to 95.9 points but remains below the long-term average of 110.

Despite government measures, including a €500 billion infrastructure fund and incentives to boost corporate investment, only a small improvement in business sentiment is expected. Companies cited rising labor costs, energy and raw material prices, and uncertain economic policies as major risks, underscoring the need for faster reforms to cut bureaucracy and stimulate growth.