BERLIN, Nov. 11 (Xinhua) -- Germany's council of economic advisers on Wednesday raised its 2026 growth forecast to 1.3 percent from a previous estimate of 0.5 percent, but warned of mounting risks to public finances.
The German Council of Economic Experts, a five-member panel appointed by the German president, said in its annual report that the upward revision was driven mainly by stronger-than-expected exports.
It said Germany's economic recovery was continuing, with stronger exports and increased government spending this year expected to support the country's first significant annual growth since 2022.
Europe's largest economy grew 0.4 percent in the first quarter and 0.3 percent in the second, before slowing to 0.2 percent in the third, according to the Federal Statistical Office.
For 2027, the council forecast growth of 1 percent, driven mainly by private and government consumption as well as public investment.
Higher energy prices are expected to push up inflation, which the council forecast at 2.8 percent in 2026 and 3.3 percent in 2027, both above the 2.2 percent recorded in 2025.
Federal spending has risen sharply since the early 2020s, the report said, driven by crisis-related expenditure, expanded social benefits and higher subsidies.
Meanwhile, rising defense and interest spending will add to the strain, with projected revenues expected to fall short of planned expenditure over the medium term, the report said.
Council chair Monika Schnitzer said limiting the rise in federal spending was unavoidable.
Germany's debt-to-GDP ratio could approach 100 percent by 2040 if the government fails to gradually scale back the debt-brake exemption for defense spending, Schnitzer said, citing the report.
According to Eurostat data, Germany's government debt-to-GDP ratio stood at 63.4 percent at the end of the second quarter, compared with 88.8 percent for the eurozone.
