Germany's RWI institute upgrades economic growth forecasts for 2026, 2027

Germany's ​RWI economic institute sharply raised ​its growth forecasts for ‌Europe's largest economy ​on Thursday, after exports and higher government spending drove a stronger-than-expected recovery in ‌the first half of the year.

Germany's economy will grow by 1.3% in 2026, RWI said, upwardly revising its forecast of 0.8% growth in ‌June. It expects gross domestic product to expand by 1.1% ‌in 2027, also up from its earlier 0.8% forecast, before growth slows to 0.5% in 2028.

The DIW Berlin economic institute also raised its forecasts for the ⁠German economy ​on Wednesday. Despite ⁠higher prices due to the Iran conflict and uncertainty caused by U.S. tariffs, ⁠the German economy has shown resilience and grew by 0.3% in the ​second quarter, supported by a strong increase in exports.

RWI cautioned ⁠that export momentum would likely weaken later this year, saying recent gains reflected ⁠temporary ​effects, including a rebound after tariff-related disruptions, rather than a lasting improvement in German competitiveness. "The recovery is here, but the ⁠structural problems have not disappeared," RWI economic chief Torsten Schmidt said.

High energy ⁠prices, ⁠bureaucracy and weak competitiveness continue to weigh on investment, while private consumption remains subdued due to labour-market uncertainty, ‌RWI ‌said.