Germany's economy is forecast to grow nearly 1.2% in 2026, according to the German Economic Institute (IW), up from its previous 0.4% estimate issued in May. Stronger exports and government spending supported a better-than-expected first half, prompting Ifo, DIW, RWI and IMK to raise their forecasts as well. IW expects growth to slow to nearly 1% in 2027, with consumption and investment each contributing about half of the expansion. It cautioned that high energy prices, weak private investment and job losses would weigh on demand in the second half. Real exports are forecast to rise 2.8% this year and imports 2%, although the export boost may prove temporary amid high production costs, protectionism and competition from China. Private consumption is expected to increase only 0.3% in 2026 as inflation above 2.5% reduces purchasing power.