Germany’s economic outlook is brightening. The federal government has raised its growth forecast for 2026 from 0.5 per cent to 1.3 per cent. Economic research institutes and private banks are also anticipating a return to growth.
But how reliable are these forecasts? A look back urges caution.
📉 Growth forecasts put to the test
The chart shows just how far forecasts can diverge from reality:
- 2022: Forecast +3.6 per cent, actual +1.8 per cent.
- 2023: Forecast +2.5 per cent, actual −0.9 per cent.
- 2024: Forecast +1.6 per cent, actual −0.5 per cent.
- 2025: Forecast +1.0 per cent, actual +0.2 per cent.
Four years, four significant downward revisions. For 2026, the opposite trend is now emerging.
📈 Economic forecast for 2026: an upturn with question marks
The German government and leading research institutes expect 1.3% growth, whilst private banks forecast 1.2%.
Improved exports and rising government spending on defence and infrastructure are supporting the economy. However, private investment and consumption remain weak, and part of the export momentum is temporary.
The upturn is gaining momentum – but has not yet broadened in scope.
🏗️ Economic recovery is not a structural turnaround
Government stimulus creates short-term growth. However, a sustainable recovery requires private investment, productivity gains and improved business conditions. Germany’s long-term growth potential is estimated in some cases at just 0.3 per cent per annum.
And growth does not necessarily equate to prosperity: economic output and real incomes remain roughly at pre-pandemic levels.
⚖️ What does this mean for real-asset investors?
The revisions to forecasts highlight just how uncertain economic expectations are. As a result, economically resilient real assets are gaining in importance, as demand for them depends more heavily on structural drivers such as demographics, security of supply and digitalisation.
🎙️ Want to know more about the economy, capital markets and real assets?
Then join us this coming Friday for our “Macro Matters” webinar. We’ll be discussing the economic outlook and its implications for various real-asset investments.
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