Ifo institute raises German growth forecasts due to new government plans
The Ifo institute has today raised its forecasts for the German economy for this year and next, expecting new government measures and a spending surge to boost the anaemic economy.
The economic institute said it expects 0.3% growth this year, up from the 0.2% previously forecast. For 2026, Ifo foresees 1.5% growth, up from the 0.8% expected in its spring forecasts.
"The crisis in the German economy reached its low point in the winter half-year," said Timo Wollmershaeuser, head of forecasts at Ifo. "One reason for the growth spurt is the fiscal measures announced by the new German government."
The German cabinet approved a €46 billion tax relief package last week to support companies and revive its sluggish economy from this year up to 2029.
Germany's parliament also approved plans for a massive spending surge in March, including a €500 billion infrastructure fund and largely removing defence investment from the rules that cap borrowing.
In its economic forecast, the Ifo institute estimates a boost of €10 billion in 2025 and €57 billion in 2026 from these measures.
As a result, growth is likely to be 0.1 percentage points higher this year and 0.7 percentage points higher next year, compared with a scenario without the government economic plans.
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