BERLIN, Feb 17 (Reuters) – Germany’s economy is expected to grow by 1% this year, more than the 0.7% previously forecast, but a year of reforms is needed to achieve a sustainable recovery, the German Chamber of Industry and Commerce said on Tuesday.
“That is too little; our competitors are more dynamic,” said DIHK Managing Director Helena Melnikov.
Europe’s biggest economy is still struggling to gain traction as geopolitical uncertainty, high operating costs and weak domestic demand weigh on companies, with growth in 2026 driven largely by statistical and calendar effects.
The DIHK’s business climate index, based on responses from around 26,000 firms across sectors and regions, rose slightly to 95.9 points but remained well below its long-term average of 110.
“With the handbrake on, we won’t get out of the valley,” said Melnikov, urging faster reforms to cut bureaucracy and lower labour and energy costs.
Companies cited weak domestic demand (59%), rising labour costs (59%), uncertain economic policies (58%) and high energy and raw material prices (48%) as key risks, according to the survey.
Investment plans stayed subdued. 23% of firms intend to increase investment, while 31% plan cuts.
(Reporting by Maria Martinez, editing by Thomas Seythal)
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