Germany set for 2026 growth as fiscal boost lifts investment: Fitch

After three years of economic stagnation driven by external shocks and deep-seated structural challenges, Germany is poised to return to growth in 2026, according to Fitch Ratings. The ratings agency expects a major fiscal loosening to revive activity, despite risks around public spending execution and private-sector response.

Recent policy measures are also aimed at reviving investment in machinery and equipment, which account for roughly one-third of total investment. The ‘growth booster’ tax reform passed in 2025 introduced accelerated depreciation for investment and a gradual reduction in corporate tax rates starting in 2028, Fitch said in a release.

Fitch also highlighted tentative improvements in industrial momentum. Industrial output rose year on year in November for only the second time since mid-2023, while capital goods orders and survey indicators linked to investment and production expectations strengthened towards the end of 2025, led mainly by domestic demand amid persistent external risks.

“Green shoots are appearing in German capex, as real investment returns to annual growth for the first time in three years,” said Charles Seville, senior director in Fitch Ratings’ economics team.

Germany is expected to return to growth in 2026 as fiscal loosening revives investment after three years of stagnation.
Early ‘green shoots’ are visible in capital expenditure and industrial output.
Tax reforms supporting accelerated depreciation and future corporate tax cuts are boosting machinery investment, while domestic orders are driving a tentative industrial recovery despite external risks.

Fibre2Fashion News Desk (HU)