BERLIN (AP) 鈥� The German government on Wednesday trimmed its 2026 forecast for the country’s economy, Europe’s biggest, as growth picks up more slowly than previously hoped.
Chancellor Friedrich Merz’s government now expects gross domestic product to expand by about 1% this year and 1.3% in 2027, Economy Minister Katherina Reiche said. , it had predicted growth of 1.3% and 1.4% respectively.
The economy returned to of 0.2% last year after shrinking for two years in a row, according to preliminary official figures released two weeks ago.
Merz’s governing coalition took office in May, with revitalizing the economy as one of its priorities. It launched a program to , set up a 500 billion-euro ($596 billion) fund to pour money into Germany鈥檚 creaking and cleared the way for increased defense spending. It is moving to subsidize for heavy industry, cut red tape and speed up the country鈥檚 lagging digitization.
鈥淭he background to the somewhat cautious estimate is the fact that the expected impetus from the financial and economic policy measures wasn’t realized quite as quickly and to the extent that we assumed,鈥� Reiche told reporters. But she said data now points to a 鈥渃lear recovery.鈥�
Germany for years expanded exports and dominated world trade in engineered products like industrial machinery and luxury cars. But it has suffered from increasing competition from Chinese companies, higher energy costs following Russia’s full-scale invasion of Ukraine and many other factors that have increased risks, including U.S. President tariffs and trade threats.
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