The German economy had stabilised towards the end of last year; many economic indicators developed positively. The growth opportunities for 2026 and 2027 were assessed favourably due to the fiscal spending programmes and support measures launched by the coalition government. However, with the Iran war and the resulting price shocks for oil and gas, the prospects for inflation and growth – not only in Germany, but worldwide – have initially deteriorated. The further development of the Iran conflict is unclear – here it is assumed that the war will be limited to the territory of Iran by the middle of the year at the latest and that the Strait of Hormuz will be freely passable again. Oil and gas prices would then move back towards pre-war levels. The recovery of the German economy, scheduled for 2026/2027, could then “pick up speed” again in the second half of this year. Under these conditions, the HWWI expects average annual economic growth of 3/4% for 2026 (before the outbreak of war: 1 1/2%) and one of 1 1/2% for 2027.

The German economy is waiting for the economic turnaround. As in the first half of 2025 overall, real gross domestic product stagnated in the 3rd quarter. A difficult international environment and a so far only tentative implementation of reforms by the new government – overshadowed by recurring disruptions within the coalition – continued to slow down economic development. However, following the settlement of the tariff issue with the USA and the gradual implementation of fiscal spending programmes and support measures, the economic climate should improve. This should be reflected in the corresponding statistics in the last months of this year, but especially from next year, especially in the case of investment in construction and equipment. Government and private consumption will also continue to support the economy. Only the balance of exports will have a negative effect with only weak exports and stronger growth in imports. For 2025, the HWWI continues to expect economic growth of 0.2% on an annual average. With increased economic momentum as a result of the fiscal programmes and support measures, economic growth of 1 1/2% is then expected for 2026 and 2027, especially as more working days (2026 a total of 2 1/2 more than in 2025, another 1 1/4 more in 2027).