By Maria Martinez
BERLIN, Jan 28 (Reuters) – The German government lowered its growth forecasts for this and next year in Europe’s biggest economy, reflecting greater uncertainty in international trade.
The government trimmed its growth forecast for 2026 to 1.0% from 1.3%, as reported by Reuters last week.
The new figure is still significantly higher than the 0.2% expansion recorded in 2025, which followed two consecutive years of contraction.
“The cyclical recovery is being supported by stronger domestic momentum, while external headwinds are easing somewhat,” said the economy ministry in its annual economic report, published on Wednesday.
Gross domestic product (GDP) growth in 2027 is seen at 1.3%, down from 1.4% expected previously, according to the new forecasts.
FISCAL STIMULUS TO DRIVE GROWTH
While the national parliament approved a landmark 500 billion euro ($598.35 billion) special fund for infrastructure in March, by the end of the year only 24 billion euros had been invested, reflecting the slow pace of decision-making in Germany’s federal system.
In 2026, fiscal-policy measures on their own are expected to contribute around two-thirds of a percentage point to GDP growth, according to the report.
Economists and business groups warn the fiscal package alone will not be enough to deliver sustainable growth and call for bolder structural reforms.
($1 = 0.8356 euros)
(Reporting by Maria MartinezEditing by Madeline Chambers)
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