The political landscape is now more fragmented and contested, setting the stage for potentially turbulent developments in 2026 and beyond.

Germany´s economic growth in 2025 is seen as weak, with most forecasts between 0.1-0.2% due to a lack of demand for German manufacturing, particularly in machinery and automotive, both domestically and abroad. Private investment was low in comparison to other years and according to research institutes, business sentiment remains cautious.

Germany approved its 2025 federal budget, including an unprecedented €500 billion investment package for infrastructure, digitalisation, climate action, and housing. Investments include modernising transport networks, expanding digital infrastructure, and supporting climate-neutral technologies.

Germany ramped up military procurement, approving over €80 billion in defence projects in 2025, including radar systems and armoured vehicles. Long-term plans foresee doubling defence spending by the end of the decade, aiming to reach roughly 3.5% of GDP, partly financed by eased debt rules.

What to expect in 2026?

There are important state elections (Landtag Elections) in 2026 that analysts will watch closely, particularly in relation to the rise of the right-wing AfD party.

As regards to the economy, the forecasts for growth are between 0.8-1.5% of GDP driven by public spending, real wage increases and consumption, with investment recovering gradually.

So in summary, Germany is focused on economic recovery, digital expansion, infrastructure revitalisation, enhanced defence and security policy, and hosting major international events such as the Carnival of Cultures and the Women´s Basketball World Cup.