By Maria Martinez
BERLIN, Oct 8 (Reuters) – The German government has raised its economic forecasts for this year and next year, as the Iran war is not hurting the economy as much as feared, the economy ministry said on Thursday.
The government has raised the forecast for economic growth to 1.3% in 2026 and 1.1% in 2027, confirming the Reuters report on October 1. It expected 0.5% growth for 2026 and 0.9% for 2027 in its April forecasts.
The new government forecasts are in line with those of Germany’s leading economic institutes.
For 2028, the government expects growth of 0.6%.
Any pickup would be welcomed by Chancellor Friedrich Merz after Germany’s sluggish economy proved a sore point in September’s regional elections that resulted in big gains for the far right and far left.
The upturn is being driven primarily by the government’s debt-financed investments in infrastructure and the strengthening of Germany’s armed forces.
Exports will also be a growth driver. The government forecasts export growth of 3.7% this year. Growth is then expected to slow to 2.1% in 2027 and 1.1% in 2028.
The war in the Middle East is affecting many consumers primarily through inflation. The government expects inflation to reach 2.7% in 2026 and 3.0% in 2027, before easing to 2.2% in 2028.
(Reporting by Maria MartinezEditing by Linda Pasquini)
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