German business association sees economy barely growing in 2026

Germany’s chambers of commerce association sharply lowered its economic growth forecast for this year, warning that Europe’s largest economy is facing a dual crisis from deep-rooted structural problems and the economic fallout from the war in the Middle East.

The German Chamber of Commerce and Industry (DIHK) now expects Germany’s gross domestic product (GDP) to grow by just 0.3% this year, down from its previous forecast of 1.0%.

DIHK chief executive Helena Melnikov said many companies were reaching their limits after years of economic weakness.

“Germany’s structural problems are now being compounded by the economic consequences of the war in the Middle East,” Melnikov said. “Weakened by three years of recession and stagnation, many are feeling stretched to their limits.”

The DIHK is now more pessimistic than the German government, which halved its own growth forecast to 0.5% last month.

According to the DIHK, business sentiment across Germany deteriorated sharply recently. In a survey, companies assessed their business situation as negatively as during the coronavirus pandemic.

More than one in four companies described their current situation as poor, while only 23% said business conditions were good. One-third of firms expect business conditions to worsen over the next 12 months, up eight percentage points from the start of the year.

Around 70% of companies identified energy and raw material prices as their biggest business risk, the survey showed.

The weak business climate is also weighing on investment plans. Only 22% of companies said they intended to increase investment spending, while more than one-third planned cuts to their investment budgets.

Nearly one in four companies surveyed said they were planning to reduce staff numbers.