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 IWH winter forecast, 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.

The global economy appears resilient as 2025 draws to a close. Considering the United States’ policy of high tariffs, the continued strength of world trade is especially noteworthy. While the U.S. economy benefits from strong investment in the tech sector, elevated inflation and a softening labour market are likely to dampen private consumption. In the euro area, growth is expected to remain modest, supported by rising real wages.

The boom in the commercial use of artificial intelligence presents both opportunities and risks. Recently, AI investments have increasingly been financed through instruments that lack transparency and loans, which could pose risks to the stability of financial markets. High and rising government debt in advanced economies also poses a risk.