Economic growth is slow - Inflation remains stubborn - Economic growth is slow - Inflation remains stubborn
Germany’s economic outlook is set for a slow but steady improvement, according to the Bundesbank’s latest forecast. Released on 19 December 2025 in Frankfurt am Main, the report suggests modest growth in 2026, with a stronger rebound expected the following year. Bundesbank president Joachim Nagel highlighted a gradual recovery driven by key economic factors.
The Bundesbank predicts Germany’s economy will grow by just 0.2 percent in 2026. This figure, though slight, marks a turning point after a prolonged period of stagnation. A more noticeable recovery of 1.3 percent is then forecast for 2027.
Private consumption is expected to rise, backed by higher wages and a tightening labour market. Government spending on infrastructure and defence will also play a significant role in stimulating growth. Exports, another critical driver, are projected to pick up again in 2026, encouraging corporate investment. Inflation remains a concern, with rates falling more slowly than anticipated. The Bundesbank now expects inflation to sit at 2.3 percent in 2025 before easing slightly to 2.2 percent in 2026. Nagel acknowledged that while the recovery will take time, the foundations for gradual improvement are in place. Despite the cautious optimism, the central bank does not foresee a full economic revival until 2027. The forecast underscores a period of transition, with growth slowly gathering momentum over the next two years.
The Bundesbank’s projections point to a measured economic recovery, with growth rates of 0.2 percent in 2026 and 1.3 percent in 2027. Higher wages, increased public spending, and a rebound in exports will support this gradual upturn. However, inflation is likely to remain above target for some time, shaping the pace of the recovery.
