Economists: Only 0.9% Growth by 2026 - Sharp Criticism of Special Funds - Germany’s 2026 Growth Forecast Hinges on Climate and Debt Challenges
Germany's economic outlook for 2026 shows a mixed picture, with growth expected but concerns raised about debt and infrastructure spending. The German Council of Economic Experts, also known as the 'Five Wise Men', has issued its latest report, highlighting key trends and challenges.
The council forecasts economic growth of 0.9% in 2026, driven by increased government spending and working days. However, this growth is expected to come with a sharper rise in the debt-to-GDP ratio due to the use of funds from the Special Fund for Infrastructure and Climate Neutrality (SVIK).
Monika Schnitzer, chair of the council and professor at the Ludwig-Maximilians-Universität München, warned against squandering the opportunities presented by the SVIK. Despite the fund's purpose, less than 50% of its spending has been classified as additional investment in infrastructure and climate neutrality. Instead, much of it has been used to finance current expenditure, having only a marginally positive impact on GDP.
The unemployment rate is projected to dip slightly from 6.3% to 6.1% in 2026. Inflation is expected to rise by 2.1%, down from 2.2% in 2025. The council also revised its 2025 economic forecast upward from 0.0% to 0.2%.
While the German economy is expected to grow in 2026, the efficient use of funds from the SVIK is crucial to ensure sustainable growth and avoid increased debt. The council's warnings highlight the need for targeted spending to maximize the benefits of the fund for infrastructure and climate neutrality.
