Germany GDP forecast raised to 1.3%

Germany raised its full-year growth forecast to 1.3 percent on Thursday, up from an April forecast of 0.5 percent, saying Europe's biggest economy had proved more resilient than expected.

“The German economy proved more robust than projected in the spring,” Economy Minister Katherina Reiche said as she announced the forecasts.

Reiche said the economy had moved toward recovery despite geopolitical uncertainty, a global energy price shock, the closure of the Strait of Hormuz and tariffs.

She said growth this year was supported by foreign trade after the outbreak of the US war against Iran, when foreign importers stockpiled German-made goods including steel, fertiliser and aluminium.

Reiche also said German suppliers were benefiting from global investment in artificial intelligence. She said data centre construction had boosted orders for German-made equipment including lasers, semiconductor machinery and cooling systems.

The economy ministry also raised its 2027 growth forecast to 1.1 percent from 0.9 percent. It said public spending on defence and infrastructure would support the economy in coming years.

The ministry warned that household consumption would remain subdued as higher energy costs push up consumer prices. German inflation reached 3.3 percent in September, its highest level in nearly three years.