KfW Business Cycle Compass November 2025

Although the upswing has not yet begun, the German economy is likely to now be in pole position. After two years of recession, moderate growth of +0.2% can be expected in 2025. It is then likely to even accelerate significantly in 2026, driven by rising government expenditure and an unusually large number of working days. Our growth forecasts for Germany for 2025 and 2026 remain unchanged at +0.2 and +1.5%. The economy in the euro area is growing at a robust pace despite the US tariffs which were increased in the spring. We have revised our forecast for 2025 upwards by 0.2 percentage points to 1.4%. We now expect slightly stronger growth of 1.3% in 2026 as well. Lower energy prices will keep the lid on price rises in 2026, particularly at the start of the year. We maintain our inflation forecasts for 2026 at 2.0% for Germany and 1.9% for the euro area.

KfW Business Cycle Compass November 2025(PDF, 296 KB, accessible)

Press release