German economy expected to grow in 2026

The European Commission has announced that the German economy is on the mend and expected to grow in 2026, but growth will still be lower than average rate expected across the political bloc.

Germany welcomes economic forecast for 2026

According to the European Commission’s autumn forecast, Germany’s gross domestic product (GDP) will grow by 1,2 percent in 2026. The news is welcome, after years of economic stagnation in Germany. The German government also predicts 1,4 percent year-on-year growth in 2027.

"A substantial part of growth in the coming years will be a result of higher state financing, in particular from the special funds for infrastructural investments and increased investment in defence," Federal Economics Minister Katherina Reiche (CDU) said in a government statement in October.

In March 2025, members of the German parliament approved unlimited military spending in the coming years, and Friedrich Merz’s 500 billion euro infrastructure plan, which will invest more in Germany's schools, hospitals, roads, bridges, transportation and more.

"After two years of shrinking economic performance, a light, low-level recovery is expected for autumn 2025," the government statement explained, "By the turn of the year 2025/26, the internal economic dynamic should pick up speed, supported by financial and economic measures taken by the federal government."

1,4 percent GDP growth expected across the EU

While the German economy is on the mend, GDP growth rates forecast for the federal republic in 2026 are still below the average forecast for the political bloc.

EU countries are expected to see an average 1,4 percent GDP growth, and countries in the eurozone, a 1,2 percent GDP growth. Malta is the EU country forecast to see the highest GDP growth in 2026, at 3,8 percent. Poland (3,5 percent) and Lithuania (3 percent) follow.

Ireland (0,2 percent), Italy (0,8 percent) Austria, France and Finland (all 0,9 percent) are the countries forecast to see the lowest GDP growth in 2026.