German institutes lift growth forecasts as business morale rises
EWG•German economic institutes raised their growth forecasts to 1.3% for 2026 and 1.1% for 2027. The Ifo business climate index rose to 89.9 in September from 88.8 in August.
1. Growth forecasts rise
Germany's leading economic institutes raised their growth forecasts to 1.3% in 2026 from 0.6%, and to 1.1% in 2027 from 0.9%. They expect growth of 0.4% in 2028.
2. Business morale improves
The Ifo business climate index rose to 89.9 in September from 88.8 in August, above the 89.0 forecast in a poll of analysts. Flash PMI data also showed German business activity expanding at its fastest pace in almost a year.
3. Recovery remains modest
The institutes said the recovery remains modest, with high energy prices and structural problems weighing on activity. They forecast inflation of 2.8% in 2026 and 3.2% in 2027, before it falls to 2.0% in 2028.
