Germany’s IW institute triples growth forecast for 2026

Germany's German Economic Institute (IW) has significantly revised its growth forecast for 2026, now predicting nearly 1.2% growth, up from the previous projection of just 0.4% in May. This upward adjustment is attributed to stronger-than-expected first-half economic performance. IW joins other prominent economic institutes, including Ifo, DIW, RWI, and IMK, in raising their growth forecasts.

However, IW anticipates a slowdown in the latter half of 2026 due to high energy prices, weak private investment, and job losses dampening demand. For the following year, 2027, IW estimates growth to be around 1%, with consumption and investment each contributing half of the expansion. The institute projects real exports to grow by 2.8% this year and imports to rise by 2%, driven by a surge in goods exports in the second quarter, partly due to inventory effects.

IW cautions that this export boost is likely temporary, as structural pressures such as high production costs, protectionism, and Chinese competition persist. Private consumption is expected to grow only 0.3% in 2026, as high inflation erodes purchasing power.