Germany's IFW lifted its 2026 GDP forecast to 1.3% (prev. saw 0.8%), citing acceleration in economic activity and improving business confidence; sees 2027 GDP at 1% (prev. saw 1%) and 0.5% in 2028

Germany's IFW lifted its 2026 GDP forecast to 1.3% (prev. saw 0.8%), citing acceleration in economic activity and improving business confidence; sees 2027 GDP at 1% (prev. saw 1%) and 0.5% in 2028.

Upgrades of this size from the major German institutes are rare and tend to reflect a view that has already been forming in the survey data rather than new information on its own; IFW is one of the institutes whose joint forecast feeds into the government's own projections, so revisions here carry some weight for the official baseline. The composition matters more than the headline number: an upgrade attributed to accelerating activity and improving business sentiment points to the demand side, whereas the recent history of German forecast upgrades has largely been a fiscal impulse story, and those two cases reprice Bunds and the DAX differently, domestic cyclicals in the former, defence and construction plays in the latter. The pattern with institute forecasts is that a large revision in one is usually followed by similar moves from the other members of the joint forecast group, making the subsequent releases from Ifo, DIW and RWI the immediate follow-ons. The unchanged 2027 view and the soft 2028 projection frame this as a pull-forward of recovery rather than a re-rating of trend growth, which limits what the euro takes from it. Worth noting is how the Bundesbank's next forecast round and the Bund curve's belly respond relative to the front end.