Volksbanken double growth forecast for the German economy

Drivers of the revision

At the same time, the association expects prices to rise. Stronger demand is meeting capacity limits in many areas, which could increasingly be reflected in higher producer and consumer prices. For the coming quarters, the Volksbanken economists therefore expect continued lively, but not overheating, economic development.

With the new estimate, the BVR is above the most recently communicated expectation from the ZEW research institute. ZEW had only recently raised its forecast but simultaneously signaled risks from the economic cooling in several trading partner countries. The Volksbanken base their assessment on their own sector surveys as well as an overall evaluation of leading indicators.

Comparison with other institutes

Other institutes have also raised their expectations in recent weeks. Landesbank Baden-Württemberg, for example, pointed to robust order intake in industry and a gradually recovering consumer sentiment. BVR President Andreas Bley had recently stressed on several occasions that the SME-dominated economy had gained in stability despite all the burdens.

Nevertheless, the association's economists see risks: weaker export demand, especially from neighboring European countries, could slow the momentum again. Energy and labor costs also remain a factor of uncertainty weighing on the planning of many companies. The BVR therefore continues to demand reliable framework conditions for investment.

Risks for the upswing

For the full year 2026, the Volksbanken thus see a mixed picture: the economy is gaining new momentum but at the same time has to deal with rising prices and external economic risks. The next economic data, including industrial order intake and purchasing managers' indices, are regarded as a litmus test for the sustainability of the wave of revisions.

In the political debate, the new forecast is likely to provide tailwind for proponents of the investment programs. In this context, the Volksbanken and Raiffeisenbanken emphasize that it is precisely small and medium-sized enterprises that benefit from the award of public contracts. Andreas Bley recently spoke out in favor of extending the programs beyond the current year.

Political impact

Overall, the association sticks to its fundamental assessment: the German economy is at a turning point at which public investment is supporting private consumption and industrial production. The coming months will show whether the growth spurt now expected is sustainable or whether external factors will slow the recovery process again.

With the significant raise of the growth expectation, the BVR is sending a signal into the ongoing economic debate. The expectation of rising prices, however, shows that the flip side of the investment effects is already being factored in. For monetary policy, this results in a mixed picture: growth supports, inflation curbs.