Germany's economic growth forecast for 2026 is significantly downgraded due to the impact of rising energy prices

The five major German economic research institutes released a joint economic forecast report on April 1st, stating that due to the rise in energy prices triggered by the Middle East conflict, Germany’s economic growth in 2026 is expected to be 0.6%, a significant downward revision from the 1.3% forecast last fall.
The report said that recent sharp increases in energy prices have significantly driven up inflation, weakened residents’ purchasing power, and suppressed Germany’s economic recovery.
The report predicts that Germany’s inflation rate will rise to 2.9% in the second quarter of this year, with average inflation rates of 2.8% and 2.9% in 2026 and 2027 respectively.
The report believes that the lagged transmission of rising energy costs will continue to drag down Germany’s economic performance in 2027, with an expected growth of 0.9% next year, down from the previous forecast of 1.4%.
The report warns that Germany’s economy faces the possibility of stagnation, with the expected economic growth rate over the next decade decreasing from the current estimate of 0.2% to zero.
The joint economic forecast report is published twice a year in spring and autumn, and is jointly compiled by the German Institute for Economic Research, the Munich Institute for Economic Research, the Kiel Institute for the World Economy, the Halle Institute for Economic Research, and the Leibniz Institute for Economic Research, serving as an important reference for the German federal government in formulating economic policies. ( Xinhua News Agency )