Germany currently represents about 27% of the eurozone economy, meaning any boost in its growth has a direct ripple effect across the region. Analysts at Deutsche Bank estimate that stronger German expansion could lift eurozone GDP by roughly 0.5 percentage points between 2025 and 2027.
The German government has pledged close to €800 billion in new borrowing for defense and infrastructure projects over the remainder of the decade. This fiscal package equals nearly 20% of Germany’s GDP—a scale comparable to the economic transfers during the country’s reunification, according to Investing.com.
As a result, economists have revised upward their growth forecasts for the German economy in the 2025–2027 period, adding almost two percentage points to earlier projections. Beyond direct effects, spillovers from trade links and investor confidence could provide an additional 0.2 percentage points of growth for the eurozone.
Deutsche Bank’s economists note:
“Other eurozone members may lack Germany’s fiscal space, but they can still benefit from the side effects of its fiscal expansion.”
Neighboring countries tied closely to Germany’s manufacturing supply chains, such as Austria, Slovakia, and Slovenia, stand to gain the most relative to their size. Larger economies like France and Italy are also expected to benefit through increased German demand for machinery and equipment.
Confidence effects may amplify the trend, since business sentiment in the eurozone often tracks developments in the German economy. However, the scale of Germany’s stimulus package also poses challenges for the European Central Bank (ECB). Deutsche Bank warns that while the ECB currently projects only a limited spillover, the reality could be larger—potentially shifting the policy debate from easing toward tightening by 2026.
As the bank’s analysts conclude:
“Germany’s plan has the potential to significantly stimulate activity across Europe in the next two years. But the extent of the impact will depend on supply constraints and how policymakers in other countries respond.”
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