German industry group lifts 2026 growth forecast to 1%

Germany's main industry association has raised its growth forecast for the country's economy this year, citing stronger business with European partners.

The Federation of German Industries (BDI) now expects gross domestic product (GDP) to grow by 1% in 2026, up from its previous forecast of 0.6%.

"Germany's growth prospects are brightening," BDI managing director Tanja Gönner said, adding that strong business with European partners in particular was providing a boost to the German economy.

Economic research institutes have also recently raised their forecasts for 2026, although they are more optimistic than the BDI. Germany's economy has been struggling through a prolonged period of weakness.

Gönner cautioned, however, that there was still no sign of a broad-based industrial recovery.

"Government spending on infrastructure and defence is driving growth, while private investment remains weak," she said.

Although incoming orders are rising, the figures are being heavily influenced by large-scale orders, Gönner said.

"It is therefore all the more important that the government takes action and implements the reforms it has announced," she said.

"Without structural reforms that reduce competitive disadvantages and permanently strengthen growth potential, there will be no long-term growth."