Germany's Growth Forecasts Trimmed Amid Global Trade Uncertainty

Germany has lowered its economic growth forecasts for the upcoming years, citing delays in the implementation of fiscal policies and global trade uncertainties. While domestic momentum slightly boosts recovery, economists warn that more structural reforms are needed to ensure sustainable growth. Borrowing limits may increase due to the lowered forecasts.

Germany has adjusted its economic growth forecasts downward for the current and coming years, reflecting uncertainties in global trade and slower-than-expected rollout of economic policies. Europe's largest economy now anticipates a growth rate of 1.0% for 2026, down from earlier projections of 1.3%, the economy ministry confirmed.

Economic conditions continue to challenge Germany's export-driven market, exacerbated by last year's U.S. tariff hikes. German Economy Minister Katherina Reiche noted that while export growth is anticipated, Germany could lose global market share again. Domestic economic momentum offers some hope, yet structural reforms remain crucial.

The national parliament's approval of a €500 billion infrastructure fund has seen limited rollout, raising concerns about decision-making speed in Germany's federal system. Economists call for bold reforms, warning that fiscal packages might fall short of achieving long-term growth. Meanwhile, slight adjustments in borrowing limits under upcoming fiscal cycles are anticipated.

(With inputs from agencies.)