Experts predict 1.8 percent growth in Berlin by 2026

Experts predict 1.8 percent growth in Berlin by 2026 - Experts predict 1.8 percent growth in Berlin by 2026

Berlin’s economy is facing mixed prospects over the next two years. Growth remains positive but is slowing, with a projected 1% expansion in 2025—just above the national average. Meanwhile, unemployment stays stubbornly high, and public spending is set to rise sharply in a bid to boost recovery.

The latest economic forecast from Investitionsbank Berlin (IBB) highlights ongoing challenges. In September, the number of employees paying social security contributions fell sharply compared to last year. Unemployment also remains above 10%, signalling persistent weakness in the labour market.

Hinrich Holm, CEO of IBB, has called for targeted action to address these issues. He stresses the need for smart investments, better digital skills training, and closer collaboration between government, businesses, and universities. His leadership at IBB, which began before 2023, follows years of experience in senior roles at NordLB until 2020.

Looking ahead, IBB economists predict a stronger rebound in 2026, with growth reaching 1.8%. This upturn will be driven largely by a surge in public investment, as government spending on economic development jumps to €5.8 billion. Key areas include expanding public transport, repairing roads and bridges, doubling housing subsidies, and accelerating digital transformation.

Berlin’s economic outlook reflects cautious optimism, with modest growth in 2025 and a more pronounced recovery expected the following year. The success of this turnaround will depend heavily on whether increased public spending can ease labour market pressures and stimulate broader economic activity.