Bundesbank Predicts Gradual Recovery for German Economy

(MENAFN) The German central bank, Bundesbank, announced on Friday that it anticipates a slow but steady rebound in Germany’s economy next year, supported by higher public spending, wage increases, and stronger exports.

"After multiple years of contraction, the Bundesbank expects the economy to gradually recover," the institution stated.

At the same time, the bank adjusted its gross domestic product (GDP) forecast for 2026, lowering it from 0.7% to 0.6%. Longer-term projections suggest growth of 1.3% in 2027 and 1.1% in 2028.

According to its semiannual economic outlook, the German economy is expected to regain momentum after years of decline, with public investment, wage growth, and export expansion acting as the main drivers of recovery.

"There are already some initial signs of an increase in government orders. However, the expansionary spending stance will not bolster economic growth more significantly until later on next year," the report noted.

Government demand is expected to rise sharply as more resources are allocated to infrastructure and defense. The forecast also highlighted that exports will see a notable increase throughout the coming year.

"In addition, investment in private residential construction will start to recover. Strongly rising wages and a gradual improvement in the labor market will underpin real income and thus consumption. With increased capacity utilization, businesses will also invest more again," the bank added.

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