German industry association BDI cuts 2026 growth forecast, urges reforms

By Maria Martinez

BERLIN, June 22 (Reuters) - Germany's industry association BDI sharply lowered its growth outlook for 2026 on Monday and warned that the country's industrial base remains under severe pressure from high costs, weak investment conditions and geopolitical risks.

The BDI expects the German economy to grow by only 0.4% this year, down from a 1% forecast made in January.

BDI President Peter Leibinger said the situation in German industry was "critical, but not hopeless," arguing that the government must act more decisively to restore competitiveness.

According to the BDI, conditions have worsened in recent months, particularly because of the Iran war and its impact on energy prices and supply chains.

High energy prices, high taxes, high unit labour costs, high non-wage labour costs, and excessive bureaucracy are burdening Germany as a business location, Leibinger said.

The BDI called for a broad reform package rather than isolated measures, urging lower corporate taxes, improved depreciation rules, stronger innovation incentives, faster planning and approval procedures, and a more efficient public administration.

"Policymakers must deliver — consistently, reliably, and with priority given to growth," Leibinger said. "That is how investment, growth, and a new beginning will emerge."

(Reporting by Maria MartinezEditing by Linda Pasquini)