Bundesbank predicts slow start for German economy in 2026

(Sharecast News) - Germany's Bundesbank said on Friday it expects "subdued" economic progress in 2026 before a government spending and export strength drives growth higher the following year. "The German economy will make headway again in 2026: while progress will be subdued initially, it will then slowly pick up," said Bundesbank president Joachim Nagel in a statement.

Government orders have begun to pick up, but increased spending will not drive economic growth significantly until later on in 2026, Nagel said, citing increased defence and infrastructure expenditure.

Meanwhile, economic projections suggest a "resurgence" in exports over the course of next year, while rising wages and an improving labour market will increase consumption, leading to a "significant" acceleration in growth in 2027, Bundesbank said.

The central bank expects expects calendar-adjusted real gross domestic product to expand by 0.6% in 2026 and 1.3% in 2027, before slowing to 1.1% in 2028 as economic growth "will lose some momentum".

"Capacity utilisation in the German economy will then be high again," Nagel said. "The shortage of skilled workers will lead to increasing labour market tightness."