03.09.2026 • 25/2026
Economic Outlook: German economy on a recovery path – Tailwinds from the global economy and fiscal policy
An increase in foreign demand has put the German economy on a recovery path in the first half of the year, despite higher energy prices. In the coming quarters, rising public investment is expected to support economic activity. According to the autumn forecast of the Halle Institute for Economic Research (IWH), gross domestic product (GDP) is projected to grow by 1.4% this year and by 0.8% in 2027. Economic recovery in eastern Germany is expected to be somewhat weaker. In June, the IWH economists had predicted growth of 0.9% for both this and the next year.
Oliver Holtemöller
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11.06.2026 • 17/2026
Economic Outlook: Between Energy Crisis and AI Boom
Until the outbreak of the energy crisis, the German economy was on a path to recovery. Now the recovery will only continue over the course of 2026 if the Gulf conflict eases and energy prices do not rise further. This assumption underlies the present summer forecast of the Halle Institute for Economic Research (IWH). In that case, German output is expected to increase by 0.9% for this year and for 2027. Growth rates in East Germany will be similar. In March, the IWH economists had predicted growth of 0.7% for 2026 and 1% for the next year.
Oliver Holtemöller
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01.04.2026 • 9/2026
Energy price shock dampens recovery – inflation rises
Although the leading economic research institutes consider the German economy to be in a recovery phase following a downturn lasting several years, they nevertheless expect only a moderate increase in gross domestic product of 0.6% for 2026 and 0.9% for 2027. “The energy price shock triggered by the Iran war is hitting the recovery hard, but at the same time expansionary fiscal policy is bolstering the domestic economy and preventing a stronger slide,” says Timo Wollmershäuser, Head of Forecasts at the ifo Institute. The institutes estimate that the inflation rate will rise to an average of 2.8% in 2026 and 2.9% in 2027.
Oliver Holtemöller
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Reassessing EU Comparative Advantage: The Role of Technology
Filippo di Mauro, Marco Matani, Gianmarco Ottaviano
International Economics,
Vol. 183,
2025
Abstract
Based on a sufficient statistics approach, we show how the state of technology of European industries relative to the rest of the world can be empirically assessed in a way that is simple in terms of computation, parsimonious in terms of data requirements, but still comprehensive in terms of information. The lack of systematic cross-industry correlation between export specialization and technological advantage suggests that standard measures of revealed comparative advantage only imperfectly capture a country’s technological prowess due to the concurrent influences of factor prices, market size, markups, firm selection and market share reallocation. These findings offer policy insights relevant to the EU’s external competitiveness debate, echoing several recommendations from the Draghi report. Achieving export specialization in key sectors requires more than just technological superiority.
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