According to the new economic forecast of the IFO Institute 2026, the German economy will overcome its permanent crisis that has been ongoing for three years.
The Munich economic researchers have significantly increased their economic forecast for the coming year: the gross domestic product could therefore increase by 1.5 percent, which would be almost twice as much as the 0.8 percent originally assumed. IFO economy chief Timo Wollmerhäuser and his colleagues also slightly increased the forecast for this year from 0.2 to 0.3 percent. “The crisis of the German economy reached its low age in the winter half -year,” said Wollmerhäuser.
One reason for the expected thrust is the announced growth package of the new federal government. The Munich economists appreciate the economic effect of the announced expenditure increases, tax cuts and investments this year at 10 billion euros, in the coming to 57 billion euros.
Principle hope in Trump
However, the increased forecast is to a large extent based on the assumption that the trade conflict with the EU that the US government will take a good end. “The increasing optimism is probably also due to the hope that the new coalition will end up with the new coalition and that there will be an agreement in the trade dispute with the USA,” said Wollmerhäuser about the expectations of the companies. As early as the first quarter of 2025, economic output increased by 0.4 percent, but primarily because of preferred exports to the United States, but also because of higher private consumption and increased investments.
US policy remains risk
Since the European trade conflict with the United States has not yet been resolved, the economic researchers see further risks in US trade policy inside. According to IFO, the import duties already increased by US President Donald Trump would reduce German economic growth by 0.1 percentage points this year and 0.3 percentage points in 2026. In the event of an agreement in the trade conflict, the growth could be higher, and if an escalation, a new recession threatens.
Inflation and unemployment rate stable
The institute does not expect a rise in inflation: According to the forecast, the institute is likely to be 2.1 percent this year and 2.0 percent in 2026. The unemployment rate could also decrease slightly again in 2026. The IFO economists expect 6.3 percent in this and 6.1 percent next year.
Other economists also see upswing 2026
The Institute for the World Economics Kiel (IFW) increased its forecast by a tenth percentage for the coming year to 1.6 percent. For the current year, the economists also raised their prediction from 0.0 to 0.3 percent. “The early indicators confirm that the industry has now found its floor after a two -year descent – at a low level -,” explained IFW economy head Stefan Kooths.
The reason for the development can be found primarily in the inland economy. “This means that private consumption increases again after a two -year dry spell, and the company investments are gradually turning into the plus.”