A German government is revising its growth forecast for the coming year, expecting a mere 1.1 percent increase in the country’s gross domestic product (GDP) by 2026, according to the German business daily “Handelsblatt” citing government sources. This is a significant downward revision from the previous forecast of 1.6 percent growth, which was announced in the fall. The new forecast will be presented by Federal Minister of Economics Robert Habeck (Greens) on Wednesday as part of the annual economic report.
The government has already revised its growth forecast for the current year, now expecting a mere 0.3 percent growth, down from the previous forecast of 1.1 percent, as reported by the “Handelsblatt” last Friday. The worse-than-expected forecast gives the government more leeway to take on debt, as the economic component of the debt brake allows for more borrowing in this case. According to government sources, the budget leeway in 2025 will increase by 2.1 billion euros as a result.
The government also expects a slight decline in inflation, with a forecast of 2.2 percent for 2025 and 1.9 percent for 2026.