BERLIN, Dec 11 (Reuters) – Germany’s economy has stabilised at a low level but remains stuck in a phase of only meagre growth, with a planned fiscal expansion from next year set to provide limited momentum, the Kiel Institute said on Thursday.
The German economic institute forecasts growth of 1.0% next year, down from its autumn forecast of 1.3%, and 1.3% in 2027, slightly above the 1.2% previously expected.
Growth of only 0.1% is forecast for this year following two years of economic contraction.
The think tank said strong headline growth rates in 2026 and 2027, driven partly by government stimulus and more working days, would mask persistently weak underlying conditions.
“A self-sustaining upswing is still not in sight,” the report said.
Germany’s general government budget deficit is projected to widen from 2.4% of GDP in 2025 to 4.0% in 2027 with the increase in public spending, the institute said.
Public debt is forecast to rise to 65.4% of GDP by 2027.
The labour market is expected to recover gradually as activity picks up, with the unemployment rate falling from 6.3% this year to 5.9% in 2027.
However, larger employment gains will increasingly be constrained by a demographic shortage of workers, the report said.
(Reporting by Maria Martinez, Editing by Miranda Murray)
