IMF lifts forecast for German economy to 1.1% growth in 2026

The International Monetary Fund (IMF) on Monday lifted its forecast for the German economy, with growth expected to hit 1.1% in 2026.

The new figure is 0.2 percentage points than the previous estimate from October 2025, although it remains under the German government's own prediction of a 1.3% boost in gross domestic product (GDP) this year.

Germany's economy - Europe's largest - rebounded marginally last year after consecutive years of recession, but it remained well behind its partners in the Group of 7 advanced economies with growth hitting just 0.2%.

However, experts expect activity to pick up this year due to a massive programme of government investment in defence and infrastructure, as well as rising domestic demand linked to stable inflation and wage rises.

This could push the country's growth rate in 2026 above that of Japan and Italy - both forecast to grow 0.7% - and France, with a 1% rise in GDP seen.

The IMF expects the eurozone's GDP to advance 1.3%, up slightly from 1.2% in its last forecast, mainly due to government spending.

The Washington-based agency also boosted its forecast for the US economy to 2.4%, up from 2.1%, and for the global economy to 3.3%, up from 3.1%.

In the longer term, the experts warned about a possible bursting of the artificial intelligence (AI) bubble, which could lead to "a decline in investment and an abrupt correction in the financial markets."

In addition, trade conflicts could intensify further with a greater impact on economic productivity than expected.