Bundesbank Sees German Growth Near 1% in 2026, Doubling Prior Forecast

FRANKFURT — Bundesbank President Joachim Nagel said on October 2, 2026, that Germany's economy could expand around 1% this year, roughly double the central bank's June projection of 0.5%, citing robust export demand and debt-financed government spending. Nagel, speaking in Frankfurt, said the fiscal package targeting defense, infrastructure and climate protection is a key growth driver, alongside unexpectedly strong foreign demand. The world's third-largest economy has barely expanded over the past three years, with expensive energy weighing on industry and the Iran war expected to add further pressure. The upgraded outlook helps explain why forecasters keep raising euro zone projections, now at or above the bloc's 1% growth potential. The downside: resilient growth may intensify inflationary pressures, with price growth near twice the European Central Bank's 2% target, potentially forcing further rate hikes.