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 by 2027 due to increased public spending.

Forecasts for Growth in Gross Domestic Product

According to the Bundesbank's new forecasts, gross domestic product is expected to grow by 0.6 percent in 2026 and by 1.3 percent in 2027. In 2028, this rate is projected to be 1.1 percent.

Growth Expectations from Government Spending and Exports

Bundesbank President Joachim Nagel stated, "From the second quarter of 2026 onwards, economic growth is expected to increase significantly, especially due to the revival in government spending and exports."

Increase in Bond Yields

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

Economic Challenges and Expectations

Germany 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 US trade tariffs and increasing competition from China, and it also faces structural issues, including unstructured bureaucracy and a lack of skilled labor.

Escaping Recession and Inflation Expectations

The economy, which is expected to contract in the April-June period of this year, is projected to achieve a 0.1 percent growth by the end of the year, thereby escaping recession. The growth rate is anticipated to be 0.9 percent for 2026 and 1.4 percent for 2027, although these forecasts are more cautious compared to the government's predictions 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.