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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Konjunktur aktuell: Deutsche Konjunktur belebt sich – Rückenwind von Weltwirtschaft und Finanzpolitik
Konjunktur aktuell,
No. 3,
2026
Abstract
Die deutsche Wirtschaft befindet sich trotz höherer Energiepreise und anhaltender Risiken durch den Golfkonflikt auf Erholungskurs. Eine steigende Auslandsnachfrage und zusätzliche staatliche Investitionen stützen die Konjunktur, während die Beschäftigung insbesondere im Verarbeitenden Gewerbe weiter rückläufig ist. Die Produktion dürfte in diesem Jahr um 1,4% und im kommenden Jahr um 0,8% zunehmen; in Ostdeutschland fällt die wirtschaftliche Erholung etwas schwächer aus.
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Facts or Feelings? The Role of Relatable Narratives in Shaping Inflation Expectations
Melina Ludolph, Giang Nghiem, Lena Tonzer
IWH Discussion Papers,
No. 10,
2026
Abstract
We examine whether combining factual information on inflation levels and forecasts with a narrative can persistently shape consumers’ inflation expectations. In a preregistered randomized controlled trial with a representative sample of 3,000 German consumers, participants received either numerical or textual information about inflation rates, with or without an accompanying narrative. All treatments immediately lower inflation expectations, with numerical information eliciting stronger adjustments. Adding a narrative produces no additional immediate effect, confirming that it conveys no new information. However, only the combination of numerical information with a narrative yields a lasting reduction in inflation expectations and forecast uncertainty still observable after four weeks. Our results suggest that combining precise information with a narrative enhances information retention and can lead to more persistent shifts in consumers’ beliefs. The effects are strongest when respondents perceive the narrative as relatable and emotionally engaging, and among those with low financial literacy and limited knowledge of inflation.
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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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Konjunktur aktuell: Zwischen Energiekrise und KI-Boom
Konjunktur aktuell,
No. 2,
2026
Abstract
Die deutsche Wirtschaft steht infolge der Energiekrise und des anhaltenden Golfkonflikts vor einer unsicheren Erholung. Steigende Kosten und eine schwächere Beschäftigungsentwicklung belasten die Konjunktur, während die Finanzpolitik stützend wirkt. Unter der Annahme stabiler Energiepreise dürfte die Produktion in diesem und im kommenden Jahr um jeweils 0,9% zunehmen; ähnliche Expansionsraten sind auch für Ostdeutschland zu erwarten.
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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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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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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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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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