German government to raise forecasts due to strong H1, source says

By Holger Hansen

BERLIN, Oct 2 (Reuters) - The main driver behind the German government's raised economic forecasts is an unexpectedly strong performance of the German economy in the first half of the year, a government source told Reuters on Friday. 

"The economic recovery still lacks a broad base: private consumption and corporate investment are developing only sluggishly, while structural problems affecting Germany as a business location persist," the source said.

A person familiar with the draft told Reuters on Thursday that the government raised the growth forecast to 1.3% in 2026 and 1.1% in 2027. It had expected 0.5% growth for 2026 and 0.9% in 2027 in its April forecasts.

The new government forecasts - which will be published on October 8 - are in line with those of Germany's leading economic institutes, which were published at the end of September.

The economy ministry directed Reuters to the release scheduled for next week and declined to comment further.

The fiscal measures introduced so far are expected to raise GDP by 1% by the end of 2027, according to the source. 

For 2028, the government expects growth of 0.6%.

The public sector will remain a driver of growth, although to a lesser extent than in previous years, the source said about 2028. 

(Reporting by Holger Hansen, writing by Maria MartinezEditing by Ludwig Burger)