Germany Lifts 2026-2027 Growth Forecasts, Citing Resilience to Iran War and US Tariffs

Germany's government raised its economic growth forecasts on October 1, 2026, projecting 1.3% growth in 2026 and 1.1% in 2027, up from April estimates of 0.5% and 0.9%, according to a source familiar with the draft. Growth of 0.6% is expected in 2028. The revisions follow stronger-than-expected resilience despite higher prices linked to the Iran conflict and uncertainty over US tariffs. The economy grew 0.3% in the second quarter. The recovery is driven mainly by debt-financed government investment in infrastructure and the expansion of Germany's armed forces. Exports are forecast to grow 3.7% this year, slowing to 2.1% in 2027 and 1.1% in 2028. Domestic consumption remains muted at 0.8% in 2026 and 1.1% in 2027. Inflation is projected at 2.7% in 2026 and 3.0% in 2027, easing to 2.2% in 2028. The government will formally present the forecasts on October 8.