28.09.2026 • 29/2026
East Germany also benefits from higher foreign demand – Implications of the Joint Economic Forecast Autumn 2026 and official regional data for the East German economy
In 2026, economic activity in East Germany is expected to grow significantly, though somewhat less strongly than in Germany as a whole. In the years ahead, the Halle Institute for Economic Research (IWH) forecasts only minor differences in growth rates between East and West Germany. The East German economy is expected to grow by 0.9% in the current year (Germany as a whole: 1.3%). Thereafter, output in East Germany is likely to expand at a pace broadly similar to that of Germany overall, rising by 0.9% in 2027 and by 0.4% in 2028.
Oliver Holtemöller
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24.09.2026 • 28/2026
Joint Economic Forecast Autumn 2026: Recovery under structural stress – fiscal policy on slippery ground
The German economy has been recovering since the end of 2025. This recovery, although stronger than expected in spring, remains modest. The leading economic research institutes expect GDP growth of 1.3% for the current year and 1.1% and 0.4% for the following two years, respectively. Compared with the spring forecast, the outlook for 2026 has been revised upward by 0.7 and that for 2027 by 0.2 percentage points. “The economy has developed more robustly than expected. However, the recovery rests on a narrow foundation, as high energy prices and structural problems continue to weigh on economic activity,” says Oliver Holtemöller, Head of Macroeconomic Forecasting at the Halle Institute for Economic Research (IWH). In the current quarter, low water levels are also temporarily dampening economic activity. The government deficit continues to increase, leading to a growing need for fiscal consolidation.
Oliver Holtemöller
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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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Investment Grants: Curse or Blessing for Employment?
Eva Dettmann
Annals of Regional Science,
Vol. 75 (2),
2026
Abstract
In this study, establishment-level employment effects of investment grants in Germany are estimated. In addition to the quantitative effects, I provide empirical evidence of funding effects on different aspects of employment quality (earnings, qualifications, and job security) for the period 2004 to 2020. The database combines project-level treatment data, establishment-level information on firm characteristics and employee structure, and regional information at the district level. For the estimations, I combine the difference-in-differences approach of Callaway and Sant’Anna (J Econom 2252: 200–230, 2021) with ties matching at the cohort level. The estimations yield positive effects on the number of employees, but point to contradicting effects of investment grants on different aspects of employment quality.
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01.04.2026 • 10/2026
Economic growth in East Germany slightly higher than in the West – Implications of the Joint Economic Forecast Spring 2026 and of new data for the East German economy
In 2025, the East German economy expanded by 0.4%, somewhat more than Germany as a whole (0.2%). For 2026, the Halle Institute for Economic Research (IWH) expects growth of 0.7% for East Germany (Germany: 0.6%). The unemployment rate is likely to amount to 7.9% in the current year, after 7.8% in 2025.
Oliver Holtemöller
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12.03.2026 • 8/2026
Oil price shock threatens recovery in Germany
Globally rising energy prices in the wake of the new Gulf War are clouding the outlook for the German economy. Nevertheless, increased public expenditure is expected to support economic activity both this year and next. According to the spring forecast of the Halle Institute for Economic Research (IWH), output is projected to grow by 0.7% in 2026 and by 1.0% in 2027. We expect similar rates of expansion for East Germany. In December, the IWH economists had predicted growth of 1.0% for both 2026 and 2027.
Oliver Holtemöller
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Economic Outlook
Joint Economic Forecast Autumn 2026 Recovery Under Structural Stress – Fiscal Policy on Slippery Ground September 24, 2026 The German economy has been recovering since the end of…
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Halle Institute for Economic Research (IWH) – Member of the Leibniz Association
Recovery under structural stress – fiscal policy on slippery ground The recovery of the German economy, although stronger than expected in spring, remains modest. In their joint…
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Centre for Evidence-based Policy Advice
Centre for Evidence-based Policy Advice (IWH-CEP) The Centre for Evidence-based Policy Advice (IWH-CEP) of the IWH was founded in 2014. It is a platform that bundles and…
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Research Articles
Research Articles Explore cutting-edge research based on CompNet’s micro-aggregated firm-level data and related analytical tools. These articles cover empirical and theoretical…
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