Berlin, May 15 – The Investitionsbank Berlin (IBB) has adjusted its economic growth forecast for the capital, anticipating a slightly lower expansion than previously expected for the current year. The bank’s economists have revised their growth projection from an initial 1.8 percent down to 1.5 percent, primarily due to the significant increase in energy prices.
Berlin’s Economy Outperforms National Average
Despite the downward revision, Berlin’s economic performance is still projected to be stronger than in 2025, which saw a growth of 1.1 percent. Furthermore, the capital’s economy is expected to grow at a faster rate than the national average. Leading economic research institutes predict that Germany’s Gross Domestic Product (GDP) will only increase by 0.6 percent in 2026, while the federal government’s forecast is even more pessimistic at 0.5 percent.
IBB Calls for ‘Smart Investments’
Hinrich Holm, Chairman of the IBB’s Executive Board, highlighted Berlin’s economic resilience over the past decade. However, he noted that current geopolitical tensions in the Middle East and the associated uncertainty in energy prices are negatively impacting global sentiment and the local economy. “It is all the more important to counteract this in Berlin with ‘smart investments,'” Holm stated.
Holm suggests that these investments should be directed towards housing construction, digitalization, and particularly the climate-neutral transformation of the economy. He emphasized that this transformation is not an end in itself but rather a means to strengthen resilience against energy price fluctuations by reducing dependence on fossil fuel imports.
Services and Construction Drive Growth
According to the IBB, Berlin’s economic growth of 1.1 percent in 2025 marked the 13th consecutive year that it surpassed the national average. This is partly attributed to the city’s economic structure, where the service sector plays a more prominent role than industry. The IBB, as the state’s development bank, anticipates that revenue growth in the service sector will offset a decline in industrial revenue in 2026. The construction industry is also expected to remain a significant driver of economic development.
Giffey Acknowledges Challenges and Progress
Franziska Giffey (SPD), Berlin’s Senator for Economic Affairs, acknowledged the city’s robust economic standing. “Berlin remains economically more robust than Germany as a whole, primarily thanks to our strong service industry and a turnaround in the construction industry,” she explained. However, she also pointed to increasing external risks beyond their control, such as high energy prices, rising fuel costs, and geopolitical tensions, which pose significant challenges for the capital’s economy.
Giffey expressed confidence in the city’s current strategies. “We see that as the State of Berlin, we are on the right track with our investments in innovation, internationalization, housing construction, digitalization, and the climate-neutral transformation,” she commented. The overarching goals are stable economic growth and enhanced resilience against negative influences.
Source: Berliner Abendblatt
