Katherina Reiche: The Ministry of Economic Affairs expects more growth in its autumn forecast

The federal government sees a significant upswing in the German economy. The Economics Ministry of Katherina Reiche (CDU) said they expect growth of 1.3 percent this year. In the spring projection, the ministry had assumed 0.5 percent.

The consequences of the Iran war and the sharp rise in energy prices initially had a significant impact on the economy. However, the German economy has proven to be more resilient than expected, the ministry said. Exports as well as government investments and higher defense spending are cited as the main reasons for the growth. Accordingly, German foreign trade was even able to benefit from global bottlenecks at times: Energy-intensive goods that were produced in Germany, for example, were increasingly stored.

The federal government expects the German economy to continue to grow in the coming year. It currently expects an increase of 1.1 percent for 2027. The ministry has so far spoken of growth of 0.9 percent. However, further developments depend significantly on the course of the geopolitical conflicts in the Middle East and Ukraine, the Ministry of Economic Affairs said. The federal government is forecasting growth of just 0.6 percent for 2028.

“The situation remains fragile”

At the end of September, leading economic research institutes had also raised their growth forecast for Germany to 1.3 percent. In the spring, the institutes warned of an energy price shock. Reiche had said in the Bundestag that growth was still on shaky ground. "The situation remains fragile." Germany is burdened by external crises such as the Iran War. The shackles need to be released, said Reiche. By this she meant more flexible working hours, a stabilization of social security contributions, less bureaucracy and competitive energy prices.

The foreign trade association BGA also does not see the recovery in Germany as solid yet, despite the more optimistic forecasts from the federal government and economic research institutes. According to an association survey, the business situation of companies improved. The companies have diversified their procurement and sales channels and adapted to the crises. “The companies see light at the end of the tunnel again, but continue to drive with the handbrake on,” said BGA President Dirk Jandura. According to preliminary figures from the Federal Statistical Office, the value of exports recently fell by 0.8 percent to 137.6 billion euros.