Energy price shock dampens recovery – inflation rises
While higher inflation is dampening private consumption, the expansionary fiscal policy is providing stimulus. The strong expansion in new debt for defense, infrastructure, and climate protection is bolstering companies in the defense industry and civil engineering. Overall, however, industry is developing less dynamically since its international business is barely expanding given the continued decline in competitiveness, high geopolitical uncertainty, and persistent trade policy burdens.
In the medium term, the institutes expect growth in Germany’s production potential – currently at 0.2% – to come to a complete standstill by the end of the decade. According to the institutes, in addition to the decline in the working-age population due to demographic factors, the decrease in working hours per person in employment is also contributing to that. This is primarily due to the fact that older employees with below-average weekly working hours account for an increasing share of the total number of hours worked. These structural changes are compounded by cyclical factors in the labour market. The institutes anticipate a slight decline in employment of around 100,000 in 2026, followed by an increase of about 42,000 in 2027. The unemployment rate will rise to 6.4% in 2026 before falling to 6.2% next year.
According to the institutes, the massive new debt will push the public budget deficit to 3.7% of gross domestic product (GDP) in 2026 and 4.2% in 2027, raising gross debt to 67.2% of GDP. The institutes assess the fiscal stimulus as a key economic boost. However, they point to the long-term risks to the stability of public finances and the significant consolidation efforts that will be required toward the end of the decade.
In light of rising energy costs, the leading economic research institutes argue against government interventions that lower energy prices in the short term, as they would nullify important market signals. Instead, they advocate targeted social compensation measures. According to the institutes, a growth policy that removes regulatory curbs on private economic activity is required so that potential reserves can be leveraged. To enable that, work incentives should be strengthened and the conditions for investment and innovation improved.
The Joint Economic Forecast was prepared by DIW (Berlin), ifo Institute (Munich), Kiel Institute, IWH (Halle) and RWI (Essen).
Appendix
Full-length version of the report (in German)
Joint Economic Forecast Project Group: Energy price shock overshadows fiscal stimulus – Growth drivers dry up, Spring 2026. Munich 2026.
The full-length version of the report will be available on 1 April 2026 at 10:00 a.m. at www.gemeinschaftsdiagnose.de/category/gutachten/.
About the Joint Economic Forecast
The Joint Economic Forecast is published twice a year on behalf of the German Federal Ministry for Economic Affairs and Energy. The following institutes participated in the spring report 2026:
- German Institute for Economic Research (DIW Berlin)
- ifo Institute - Leibniz Institute for Economic Research at the University of Munich in cooperation with Austrian Institute of Economic Research (WIFO) Vienna
- Kiel Institute for the World Economy
- Halle Institute for Economic Research (IWH) – Member of the Leibniz Association
- RWI – Leibniz Institute for Economic Research in cooperation with the Institute for Advanced Studies Vienna
Scientific contacts
Professor Dr Timo Wollmershäuser
ifo Institute – Leibniz Institute for Economic Research at the University of Munich
Tel +49 89 9224 1406
Wollmershaeuser@ifo.de
Dr Geraldine Dany-Knedlik
German Institute for Economic Research (DIW Berlin)
Tel +49 30 89789 486
GDanyknedlik@diw.de
Professor Dr Stefan Kooths
Kiel Institute for the World Economy
Tel +49 431 8814 579 or +49 30 2067 9664
Stefan.Kooths@kielinstitut.de
Professor Dr Oliver Holtemöller
Halle Institute for Economic Research (IWH) – Member of the Leibniz Association
Tel +49 345 7753 800
Oliver.Holtemoeller@iwh-halle.de
Professor Dr Torsten Schmidt
RWI – Leibniz Institute for Economic Research
Tel +49 201 8149 287
Torsten.Schmidt@rwi-essen.de
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Energiepreisschock überlagert Fiskalimpuls – Wachstumskräfte versiegen
in: Dienstleistungsauftrag des Bundesministeriums für Wirtschaft und Energie, 1, 2026
Abstract
Nach einem mehrjährigen Abschwung hat im Verlauf des vergangenen Jahres eine Erholung eingesetzt. Während die exportorientierte Industrie angesichts weiter abnehmender Wettbewerbsfähigkeit, hoher geopolitischer Unsicherheit und fortbestehender handelspolitischer Belastungen kaum Tritt fasste, wurde die Erholung maßgeblich von der Binnenwirtschaft getragen. Der Energiepreisschock, der durch den Iran-Krieg ausgelöst wurde, dämpft die Erholung, dürfte sie aber nicht vollständig zum Erliegen bringen. Dafür sorgt der erheblich expansive Kurs der Finanzpolitik, der vor allem Unternehmen der Verteidigungsindustrie und des Tiefbaus stützt. Im Großteil des Verarbeitenden Gewerbes bleibt die Lage jedoch verhalten.
Das Bruttoinlandsprodukt dürfte in diesem Jahr um 0,6% und im Jahr 2027 um 0,9% zunehmen, nachdem die Wirtschaftsleistung im Vorjahr mit einem Anstieg von 0,2% kaum mehr als stagniert hat. Im Vergleich zum Herbstgutachten 2025 haben die Institute damit ihre Prognose für das laufende Jahr deutlich um 0,6 Prozentpunkte und für das kommende Jahr um 0,4 Prozentpunkte nach unten korrigiert.
