Germany’s Council of Economic Experts raised its 2026 growth forecast to 1.3% from 0.5% and its 2027 forecast to 1% from 0.8%. It warned the federal budget could face a gap of 2.7% to 4.8% of annual economic output by 2040, requiring tough policy choices.
Germany’s Council of Economic Experts raised its growth forecasts, citing stronger-than-expected exports and a quicker recovery from energy shocks. The five-member panel now expects growth of 1.3% in 2026 and 1% in 2027, up from May estimates of 0.5% and 0.8%, respectively. It forecasts inflation of 2.8% this year and 3.3% next year, compared with 2.2% last year.
The council warned that the federal budget could have a gap equal to 2.7% to 4.8% of annual economic output by 2040, beyond current budgeting projections. Chair Monika Schnitzer said relying on additional growth alone would not resolve budget issues and that policymakers would face tough decisions. The council recommended cutting subsidies and reversing a law allowing employees to retire on a full pension after 45 years of social security contributions.
