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Germany GDP to recover gradually from 2026, Bundesbank forecasts
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)
Indonesia’s apparel exports rose modestly to $8.705 billion in 2025 from $8.316 billion in 2024, reflecting gradual recovery.
The US remained dominant, accounting for over 56 per cent of shipments, highlighting growing market dependence.
While Japan, South Korea and Europe offered stability, exports stayed concentrated in key products and segments.
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Methanol prices in India have surged nearly 150 per cent from pre-Iran–US tension levels, tracking a sharp rise in crude oil and tightening global energy markets.
Hormuz disruption risks, limited rerouting capacity, rising freight and insurance costs, and constrained imports are fuelling volatility, with prices seen approaching ₹90 per kg.
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The easing in the rate of decline reflects moderating downward pressure from energy markets, particularly crude oil prices, which continue to influence industrial pricing trends, CBS said in a press release.
Manufacturing output prices in the Netherlands fell 2.3 per cent YoY in February 2026, a smaller decline than January’s 2.5 per cent, according to CBS.
The drop was driven by lower crude oil prices, though the pace of decline eased.
Petroleum prices remained subdued.
On a monthly basis, prices rose 0.3 per cent, signalling mild recovery in domestic and export markets.
In February, the average price of a barrel of crude oil stood at nearly €59, down by over 18 per cent YoY. This compares with January, when Brent crude averaged around €55 per barrel, registering a sharper annual decline of more than 27 per cent.
Petroleum-derived product prices also showed a narrower contraction, falling by 9.1 per cent YoY in February compared to a steeper 15.6 per cent drop in January.
On a month-on-month (MoM) basis, however, manufacturing output prices edged higher by 0.3 per cent in February. Export prices rose by 0.4 per cent, while domestic market prices increased by 0.3 per cent, indicating a modest recovery in short-term pricing momentum.
Fibre2Fashion News Desk (SG)
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