Germany's Ifo Institute Revises Up Growth Estimates

By Ed Frankl

Healthy exports and a rising German public investment have raised expectations for the country's economic growth this year, a leading economic-research institute said Thursday.

The Ifo Institute now anticipates growth of 1.4% for the current year, from 0.8% in its previous quarterly report made in June.

"A significant impetus from abroad and increased spending on infrastructure, climate projects, and defense in Germany are preventing a more pronounced slowdown in growth due to the energy-price shock and low river levels," says Timo Wollmershaeuser, head of business cycle analysis and forecasts at Ifo.

The uptick was also driven by an upward revision to gross domestic product growth in 2026 so far. In late August, Germany's statistics agency said growth in the second quarter was 0.3%, better than the 0.2% first reported, driven by stronger exports that overcame some of the hit from surging energy costs due to the war in Iran. GDP increased 0.4% in the first quarter of this year.

"Above all, there is a light at the end of the tunnel for the crisis-plagued industrial sector," Wollmershaeuser added. Industrial output has climbed in recent months, official data showed.

Ifo now expects growth at 1.2% in 2027, from 0.8% it predicted in June, and 0.8% in 2028.

Bundesbank President Joachim Nagel told French daily Le Monde on Wednesday that growth is on track for roughly 1% this year, better than the central bank's June forecast.

Nagel is a member of the European Central Bank's governing council, which is expected to vote to raise the key interest rate by a quarter-point next week.

Write to Ed Frankl at edward.frankl@wsj.com

(END) Dow Jones Newswires

September 03, 2026 04:45 ET (08:45 GMT)