IMF raises German growth forecast to 1.3% for 2026 from its July estimate

Germany's forecast rises to 1.3%

The International Monetary Fund raised its growth forecast for Germany on Tuesday, 13 October 2026, when it released its World Economic Outlook at the annual meeting in Bangkok. The Fund now expects the German economy to grow 1.3% in 2026 and 1.1% in 2027. Reports cite the July estimate differently, as 0.6% in Spiegel Online and 0.7% in Der Tagesspiegel. The new figure matches the forecast Berlin published the previous week, and the Federal Ministry for Economic Affairs attributes the optimism to the surprisingly strong resilience of the German economy. Economy minister Katherina Reiche (CDU) said two-thirds of the upswing comes from state investment in infrastructure and defence and one-third from exports. Der Tagesspiegel adds that German exporters gained at times as buyers stockpiled steel, fertiliser and aluminium made in Germany amid the Gulf conflict, and that German suppliers also benefit from the AI boom.

Eurozone, world and US forecasts

The IMF expects the eurozone economy to grow 1.1% in 2026, 0.2 percentage points above its July forecast, and 1.2% in 2027. Economic output stagnated in the first quarter and grew in the second, mainly because of a very strong recovery in Ireland and continued momentum in Spain. Other euro countries stayed largely stable, although higher energy prices and weak consumer confidence are holding back growth. For the world economy the Fund raised its 2026 forecast to 3.1% from 3.0%, and it kept its 2027 forecast at 3.4%. For the United States it kept its 2026 forecast at 2.3%, and it expects growth in 2027 to be marginally higher than previously expected.

The energy shock was absorbed

Handelsblatt reports that US President Donald Trump and Israel began the war against Iran about half a year before this outlook, and that the Strait of Hormuz, which was open before the conflict, was blocked as a result, leaving only a fraction of commodity trade flowing. Frankfurter Allgemeine reports that oil prices nearly doubled in the first months of the conflict and later stood 20 to 40% above pre-war levels. Gulf states rerouted their exports, other producers added 2 million barrels a day, and inventories supplied a further 4 million barrels. China cut its oil imports by 23% between March and June compared with a year earlier. The IMF calculates that the oil price shock reduces global growth in 2026 by only 0.3 percentage points, compared with 0.9 points without the extra supply, reserves and lower oil dependence. Oil use per unit of economic output has fallen about 20% since the mid-2010s.

A split world economy

The IMF describes its outlook as split in two. Only 32 economies now account for 95% of global growth, down from 54 in April. Countries that gain from the AI investment boom or from exporting energy while located outside the conflict zones offset losses for energy importers and for economies with little role in the AI supply chain. Silvana Tenreyro, the IMF's new chief economist, said the world economy has proven resilient but that this resilience is under pressure and that risks to growth are tilted to the downside. AI productivity gains are visible in some sectors but appear only slowly in aggregate data such as wages. The Fund warned that if AI expectations prove unjustified, a sharp sell-off of tech shares could weigh on global growth.