German government to raise forecasts due to strong H1, source says

The German government has increased its economic forecasts due to an unexpectedly strong performance of the economy in the first half of the year, according to a government source.

The recovery, however, remains limited, with private consumption and corporate investment developing slowly. Structural issues affecting Germany as a business location continue to persist, the source noted.

According to a person familiar with the draft, the government raised the growth forecast to 1.3% for 2026 and 1.1% for 2027. This is a significant increase from the April forecasts, which predicted 0.5% growth for 2026 and 0.9% for 2027.

The new forecasts, set to be published on October 8, align with those of Germany's leading economic institutes, published at the end of September. The Ministry of Finance directed Reuters to the release scheduled for the following week and declined further comment.

The fiscal measures implemented so far are expected to raise GDP by 1% by the end of 2027, as per the source. For 2028, the government anticipates growth of 0.6%. The public sector will continue to be a key driver of growth, albeit to a lesser extent than in previous years, the source said about 2028.