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.
