In brief

• Germany's Council of Economic Experts raised its 2026 GDP growth forecast to 1.3%, from 0.5% in the spring.
• The 2027 forecast rose to 1.0% from 0.8%, driven by stronger exports and state spending.
• The council warns that rising public debt requires painful budget decisions and further reforms.

Forecast revised sharply upward

Germany's Council of Economic Experts, known as the Wirtschaftsweisen, has substantially raised its growth outlook for the next two years. The council now projects that inflation-adjusted gross domestic product will rise 1.3% in 2026, up from the 0.5% it forecast in the spring. For 2027 it expects 1.0%, compared with 0.8% previously (Wirtschaftsweise korrigieren Wachstumsprognose deutlich nach oben – tagesschau.de) (Alemania crecerá este año un 1,3%, más del doble de lo previsto, pero los ‘sabios’ avisan del riesgo presupuestario – EL PAÍS).

The council says the economy has recovered faster than expected from the energy price shock that followed the outbreak of the Iran war. Exports have performed better than anticipated, and that is the main reason for the upgrade (Sachverständigenrat - Wirtschaftsweise erwarten für 2026 und 2027 wieder deutlich höheres Wachstum – Deutschlandfunk) (Konjunkturerwartung - Wirtschaftsweise legen Jahresgutachten vor – Deutschlandfunk).

Government spending drives part of the rebound

State spending is the other major factor. Debt-financed special funds for modernising infrastructure, measures against global warming and the rearmament of the Bundeswehr are supporting growth, the council said. Research institutes had already lifted their own forecasts before the council published its report.

Warnings about debt and reforms

The council's chair, Monika Schnitzer, cautioned the government against excessive optimism. She argued that growth alone cannot solve the budget problems and that difficult decisions will be unavoidable (Konjunkturprognose - Wirtschaftsweise erwarten deutlich höheres Wachstum - weitere Reformen angemahnt – Deutschlandfunk). Rising state debt is the council's central concern (Jahresgutachten: Wirtschaftsweise erhöhen Wachstumsprognose für 2026 deutlich – ZEIT ONLINE) (En Allemagne, l’économie va mieux qu’en France, mais l’envolée de la dette fait craindre une « crise budgétaire » d’envergure – Le Monde).

Schnitzer proposed reducing tax breaks and implementing the pension reform as recommended by an expert commission. She also suggested reversing the recently approved expansion of the so-called Mütterrente, a benefit for mothers' pensions. The council further floated a surcharge-style levy to fund defence spending, a proposal reported by public broadcaster ARD.

Chancellor Friedrich Merz said the message had been received and described the signals as encouraging. Economists remain divided on whether the upturn will prove lasting.

Forecast comparison

• 2026 GDP growth, spring forecast: 0.5%
• 2026 GDP growth, new forecast: 1.3%
• 2027 GDP growth, spring forecast: 0.8%
• 2027 GDP growth, new forecast: 1.0%

Read also

• German Economy Grows 0.2% in Third Quarter, Beating Expectations