Confidence in German economy for 2026 but not a lot, survey shows

As the start of 2026 approaches, confidence is prevailing in the German economy for the first time in years, a survey by the employer-friendly German Economic Institute (IW) showed.

Of the 46 industry groups surveyed, 19 expect higher production in the new year than in 2025, with only nine forecasting a decline.

Still, IW writes that this slightly positive balance does not indicate strong economic momentum. The survey's results on anticipated investment back this, with 11 associations expecting more investment than in 2025, but 14 groups predicting a drop.

Many problems remain

"Anyone who hoped for a swift and comprehensive end to the economic crisis will be disappointed again in 2026," said IW Director Michael Hüther, summarizing the results of his organization's annual survey of major industry associations.

"This comes as no surprise, as little has changed in terms of the overall conditions – uncertainty, weak trade, expensive location."

At the turn of the year, 18 of the 46 participating associations say the current situation in their economic sector was worse than a year ago, but there is less pessimism than in last year's survey. At that time, 31 of the 49 associations rated the situation in their industry as worse than a year earlier.

In the current survey, the optimists are mainly found in the service sector, which includes banks and insurers. The construction industry and the real estate sector are also predicting an uptick compared to the end of 2024.