Germany’s economy remains stagnant with GDP growth forecasted at only 1% in 2026
Germany’s economy is still in a state of stagnation, with the German Chamber of Commerce and Industry (DIHK) forecasting a GDP growth of just 1% in 2026, warning that this growth rate is insufficient to keep pace with global competitors.
Preliminary data indicate that Germany’s GDP growth in 2025 will be only 0.2%. Marcel Fratzscher, president of the German Institute for Economic Research, stated that a return to previous growth rates is unlikely due to structural challenges such as labor shortages, an aging population, and an increasing number of pensioners. Fratzscher also warned that covering the budget deficit from 2027 to 2029 will require over €130 billion, necessitating tax hikes and subsidy cuts. He suggested prioritizing the elimination or reduction of tax benefits on diesel fuel while simultaneously raising export taxes on agricultural products to generate climate-related benefits.
This outlook highlights the urgent need for substantial economic reforms and new growth incentives to revitalize Germany’s economy in the coming years.
