Bundesbank's Optimistic Expectations: The German Economy Will Revive in 2027.

Promising Developments in the German Economy

The German Central Bank (Bundesbank) has made optimistic predictions about the country's economic future. According to the bank's latest report, Germany's economy is expected to gradually recover next year, gaining momentum with an increase in public spending by 2027.

Forecasts for Gross Domestic Product Growth

According to Bundesbank’s new predictions, gross domestic product is expected to grow by 0.6% in 2026 and by 1.3% in 2027. In 2028, this rate is projected to be 1.1%.

Growth Expectations with Government Spending and Exports

Bundesbank President Joachim Nagel stated in a press release that "from the second quarter of 2026, economic growth will be significantly boosted by a revival in government spending and exports."

Increase in Bond Yields

Germany's 10-year bond yield rose by 3 basis points to 2.88% following the predictions. The 30-year bond yield also increased to 3.53%, reaching its highest level since 2011.

Economic Challenges and Expectations

Germany has entered a prolonged recession due to the continuous decline in gross domestic product over the past two years. The country remains vulnerable to factors such as high U.S. trade tariffs and increased competition from China, and it also faces structural issues such as unstructured bureaucracy and a lack of skilled labor.

Recovery from Recession and Inflation Expectations

The economy, which is expected to shrink in the April-June period of this year, has managed to escape recession with a forecast for 0.1% growth by the end of the year. The growth rate for 2026 is estimated at 0.9% and for 2027 at 1.4%, although these predictions are considered more cautious compared to the government's forecasts in October.

Regarding inflation, economists believe that price increases will decrease more slowly than expected due to "continuously high wage increases." Additionally, the presence of upward risks in the inflation outlook has also been noted.