Germany Lifts 2026 Economy Growth Outlook to 1 Percent
The revision was largely attributed to statistical and calendar effects rather than any fundamental improvement in economic conditions. Europe's largest economy remains hobbled by geopolitical instability, elevated operating costs and persistently weak consumer demand, DIHK warned.
The association's latest Economic Outlook survey painted a sobering picture of business sentiment. Some 59% of companies flagged weak domestic demand as their foremost economic risk, with an equal share citing surging personnel costs as a serious threat to production capacity. Roughly six in 10 firms identified uncertainty surrounding government economic policy as a significant concern, while 48% reported that elevated energy and raw material prices were eroding operational profitability.
Investment appetite across the private sector remains deeply subdued. Despite the German government's approval of a €500 billion ($591 billion) infrastructure fund and a package of investment incentives in June 2025, corporate Germany has largely adopted a wait-and-see posture. Only 23% of surveyed companies intend to raise investment levels, compared to 31% who plan to cut them. Private sector investment overall sits 11% below pre-COVID-19 levels.
The labor market outlook is equally troubling. Nearly a quarter of companies — 23% — anticipate workforce reductions over the coming months, while just 12% foresee any job creation.
The sole area of relative optimism emerged from the export sector, where the share of companies forecasting higher exports over the next 12 months climbed 3 percentage points from the prior survey to reach 22%, despite ongoing global trade policy turbulence.
DIHK CEO Helena Melnikov offered a blunt assessment of the results, declaring that the projected 1% growth rate is "too little," and that Germany's competitors are outpacing it. Drawing stark comparisons, she noted that the global economy has expanded 19% since 2019, the United States by 15% and Italy by 6%.
"Only in Germany have we stagnated at 0.2% since 2019," Melnikov said.
"Anyone who wants to secure our prosperity must now work consistently on the key factors for business location," she added.
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