Germany faces 420 billion euro investment gap due to crises

A study by the German Institute of Economic Research (IW) reveals that the German economy has faced a massive investment gap due to the COVID-19 pandemic and international conflicts. Since 2020, private companies have invested approximately 470 billion euros less than what historical trends would have predicted, representing a nearly 12 percent decrease in investment activity.

While public spending has increased by roughly 50 billion euros—driven by infrastructure funds and defense spending exceptions—it has not been enough to offset the decline in private capital. This results in a total estimated price-adjusted investment deficit of approximately 420 billion euros.

Data indicates that private investment levels in the second quarter of 2026 remained more than 10 percent below the 2019 annual average. Experts note that public expenditures cannot replace private investment for sustainable growth, highlighting a need for improved business conditions and lower energy costs to attract capital.