Germany must pivot toward new 'growth engines', Economy Minister Katherina Reiche says

Germany's Economy Minister Katherina Reiche said on Friday the country must pivot toward new "growth engines", arguing that traditional export strengths "no longer carry our growth" as they once did.

"The sources of global growth today lie in areas like digitalization and artificial intelligence; in new energy technologies, biotechnology, advanced materials, and the defence industry," Reiche told Germany's lower house of parliament.

Europe's biggest economy lowered its growth forecasts for this and next year on Wednesday, citing heightened uncertainty around global trade and the fact that economic and fiscal-policy measures had not taken effect as quickly as previously assumed.

The government trimmed its growth forecast for 2026 to 1.0% from 1.3%, confirming a report from Reuters last week. GDP growth in 2027 is now seen at 1.3%, down from 1.4% expected previously.

"The central question is: how do we secure prosperity, competitiveness and social peace in this new situation?" Reiche said, referring to a fragmented world economy.

Reiche said the government is pursuing a two-track approach: an investment push in infrastructure, climate protection and defence, alongside reforms designed to attract private capital.

Public investment makes up only 16% of total investment, the minister said. "We must achieve more private investment."

-Maria Martinez/Reuters