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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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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11.12.2025 • 34/2025
Slight upturn on the horizon, structural problems remain
As the year draws to a close, it remains uncertain whether the German economy is on a path to recovery, as export weakness persisted through the autumn. Nevertheless, a slight upturn is forecast for 2026, supported by fiscal stimulus and rising real incomes. According to the winter forecast of the Halle Institute for Economic Research (IWH), output is projected to grow by 1.0% in 2026, after an increase of just 0.2% in 2025. In September, the IWH economists had predicted growth of 0.8% for 2026 and 0.2% for the current year. According to this forecast, the pace of expansion in East Germany is expected to be slightly slower, mainly due to demographic factors.
Oliver Holtemöller
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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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04.09.2025 • 26/2025
Recovery on shaky ground – tariffs dampen growth, but a change in fiscal policy is on the way
In late summer 2025, it is still unclear whether the German economy is on the road to recovery, as it has to cope with the dampening effect of higher US tariffs in the second half of the year. It is not until 2026 that fiscal policy stimulus measures, combined with low key interest rates, will probably lead to an economic upturn. According to the autumn forecast of the Halle Institute for Economic Research (IWH), production is then expected to increase by 0.8%, following 0.2% in 2025. Similar rates of expansion are also expected for East Germany. In June, the IWH economists were forecasting growth of 1.1% for 2026 and 0.4% for the current year.
Oliver Holtemöller
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IWH at 2020 ASSA Annual Meeting in San Diego
IWH at 2020 ASSA Annual Meeting in San Diego Next year’s 2020 ASSA Annual Meeting , organised by the American Economic Association (AEA) on an annual basis, is going to take place…
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East Germany
The Nasty Gap 30 years after unification: Why East Germany is still 20% poorer than the West Dossier In a nutshell The East German economic convergence process is hardly…
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Media Response Archive 2021 2020 2019 2018 2017 2016 December 2021 IWH: Ausblick auf Wirtschaftsjahr 2022 in Sachsen mit Bezug auf IWH-Prognose zu Ostdeutschland: "Warum Sachsens…
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IWH Alumni The IWH maintains contact with its former employees worldwide. We involve our alumni in our work and keep them informed, for example, with a newsletter. We also plan…
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