The German economy is expected to grow by 0.3% this year following two consecutive years of contraction, the economic institute DIW Berlin said today, the fifth institute to raise its forecasts for 2025 and 2026.
The DIW had previously expected 0.1% growth for 2025 but it upgraded the forecast due to a better-than-expected first quarter, when the German economy grew by 0.4%.
“The surprisingly dynamic start to the year is likely to spare us from another year of stagnation,” said the DIW’s chief economist Geraldine Dany-Knedlik.
The economy is expected to gain momentum at the end of the year thanks to a government investment package, the DIW said in its report.
Germany’s parliament approved plans for a massive spending surge in March, including a €500 billion infrastructure fund and largely removing defence investment from rules that cap borrowing.
The investment package and improved financing conditions are likely to give the economy a noticeable boost, while US trade policy burdens German foreign trade and the global economy, the institute said.
The German economy is expected to grow by 1.7% next year, according to the DIW Berlin, up from a previous forecast of 1.1%.
Meanwhile, German inflation eased to 2.1% in May, the federal statistics office said today, confirming preliminary data.
German consumer prices, harmonised to compare with other European Union countries, had risen by 2.2% year-on-year in April.
