Germany’s gross domestic product (GDP) is projected to grow by about 0.6–0.7 per cent next year, rising to 1.3 per cent in 2027 before easing to 1.1 per cent in 2028, signalling a gradual recovery after years of contraction, according to the Bundesbank’s December 2025 Forecast. Economic momentum is expected to strengthen from the second quarter (Q2) of 2026.

The central bank noted that unadjusted growth rates will be slightly higher due to a greater number of working days. By 2028, capacity utilisation is expected to return to high levels, while persistent shortages of skilled workers are likely to tighten labour market conditions further.

Germany’s economy is set for a gradual recovery, with GDP growth of about 0.6-0.7 per cent next year, rising to 1.3 per cent in 2027 before easing to 1.1 per cent in 2028, according to the Bundesbank.
Momentum is expected to strengthen from Q2 2026, driven by government spending, exports and rising wages, while inflation is forecast to ease only slowly amid strong wage growth.

Early signs of rising government orders are already visible, although the Bundesbank cautioned that expansionary fiscal policy will only begin to materially support growth later in 2026. Rising wages and a gradual improvement in labour market conditions are expected to underpin real incomes and household consumption, while higher capacity utilisation should encourage businesses to step up investment, Bundesbank said in a press release.

“The German economy will make headway again in 2026: while progress will be subdued initially, it will then slowly pick up,” said Joachim Nagel, president of Bundesbank. “Starting in the second quarter of 2026, economic growth will strengthen markedly, driven mainly by government spending and a resurgence in exports.” He added that “overall, growth will accelerate significantly in 2027.”

Despite the positive outlook, the Bundesbank warned that fiscal stimulus will have only a limited effect on the economy’s long-term potential. Potential output growth is estimated at just 0.4 per cent per year, with Nagel stressing that broader structural reforms are needed to sustain growth over the longer term.

Inflation is expected to decline more slowly than previously anticipated. “One major reason why inflation will fall more slowly than previously expected in the coming years is the continued high level of wage growth,” Nagel said, adding that smaller declines in energy prices are also weighing on disinflation. Harmonised Index of Consumer Prices inflation is forecast to ease from 2.3 per cent in 2025 to 2.2 per cent in 2026, before settling around 2 per cent in 2027 and 2028.

“We recommend a reformed rule that facilitates investment and establishes guardrails for borrowing,” added Nagel, noting that such reforms would help bring government debt back towards 60 per cent of GDP in the long term.

Fibre2Fashion News Desk (SG)

Vietnam’s economy is projected to expand 7.2 per cent in the fourth quarter (Q4) of 2025, bringing full-year growth to around 7.7 per cent, according to United Overseas Bank (UOB). The bank expects growth momentum to moderate towards year-end due to a high base effect and persistent uncertainty around global tariffs.

Looking ahead, UOB forecasts Vietnam’s GDP growth to ease further to about 7 per cent in 2026 as the boost from export front-loading diminishes.

The Vietnamese dong is also expected to underperform regional peers, with UOB projecting the USD-VND exchange rate at 26,300 in the first quarter of 2026, gradually strengthening to 25,900 by the end of the year, said Vietnamese media reports quoting UOB.

Vietnam’s economy is forecast to grow 7.2 per cent in Q4 2025, taking full-year expansion to about 7.7 per cent, according to UOB.
The growth is expected to ease in 2026 to around 7 per cent as export front-loading fades.
Strong exports, manufacturing and domestic demand supported 2025 performance, though high export dependence and productivity challenges remain key risks.

Suan Teck Kin, executive director of global economics and markets research at UOB, said Vietnam’s strong 2025 performance places it among ASEAN’s fastest-growing economies, supported by manufacturing strength, robust exports, improving domestic consumption and public investment. He noted that supply-chain realignments linked to US–China tensions have benefitted Vietnam, with the US now accounting for around 30 per cent of total exports.

Meanwhile, Suan cautioned that Vietnam’s heavy reliance on exports increases vulnerability to a global slowdown, particularly weaker US demand. Rising wages without corresponding productivity gains could also weigh on competitiveness, underscoring the need for continued infrastructure investment, skills development and market diversification in 2026.

Vietnam’s exports rose 16.8 per cent year on year in January–October 2025, building on the strong growth seen a year earlier. Exports to the US jumped 28.1 per cent, aided by the lowering of reciprocal tariffs to a global base rate of 10 per cent, which prompted buyers to advance orders.

Vietnam’s trade surplus narrowed to $18.7 billion by October from $22.4 billion in 2024, reflecting higher imports of raw materials and components amid strong export demand. Manufacturing output rose 10.8 per cent in the first nine months of 2025, up from 9.4 per cent a year earlier, while four consecutive PMI readings above 50 signalled continued expansion, said UOB.

Fibre2Fashion News Desk (SG)