Will the Federal Republic of Germany announce that it is in an economic recession by the end of 2026?
Jeremy Lichtman’s Multi-AI Oracle predicts today: 30%
10–13 minutes read
Obtaining outside data.
Checking internet sources, using keywords: Germany economic recession 2026
News from various sources:
Based on the provided web content, here is a summary of the relevant information regarding Germany’s economic situation and prospects for 2026:
1. **Germany’s Economic Outlook**:
– The iShares MSCI Germany ETF has performed well in 2025, suggesting optimism about Germany’s economic recovery. The ETF focuses on mid and large-cap German equities in sectors like industrial, financials, IT, and consumer discretionary.
2. **Challenges and Risks**:
– Germany’s economy has faced challenges such as high energy prices, competition from China, and the impact of US tariffs.
– Risks that could affect future growth include potential shortfalls in GDP growth, a reversal of the euro’s strength, and limitations in benefits from AI and automation advances.
3. **Current Economic Situation**:
– According to AFP News, the German economy is likely to avoid a technical recession, supported by an improvement in industrial production despite ongoing structural challenges like high energy costs.
– The Bundesbank noted that German industrial output increased by 1.3% in July, although industrial orders showed volatility. There was optimism in demand for German industrial goods.
4. **Government Initiatives**:
– Chancellor Friedrich Merz is focusing on revitalizing the economy, proposing significant investments in rearmament and infrastructure to address economic challenges.
Overall, while Germany has faced economic difficulties, there are signs of resilience and potential for recovery in upcoming years, with government initiatives and industrial performance being key factors to watch.
Fact-checking news summary:
Here is a list of specific facts derived from the summary, along with an assessment of their correctness, importance to the resolution of the question, and relevance to the outcome:
1. **Fact:** The iShares MSCI Germany ETF performed well in 2025.
– Correctness: True (Assuming reported performance is based on external data)
– Importance: Lesser
– Relevance: True (An indicator of market confidence in Germany’s economy, but not directly predictive of a recession)
2. **Fact:** The ETF focuses on mid and large-cap German equities in sectors such as industrial, financials, IT, and consumer discretionary.
– Correctness: True (Consistent with the typical focus of the iShares MSCI Germany ETF)
– Importance: Unimportant
– Relevance: False (This is background information about the ETF, not directly relevant to the economic forecast)
3. **Fact:** Germany’s economy has faced challenges like high energy prices, competition from China, and the impact of US tariffs.
– Correctness: True (These challenges are historically and currently relevant)
– Importance: Important
– Relevance: True (These factors can impact economic stability and growth)
4. **Fact:** Risks to Germany’s future growth include potential shortfalls in GDP growth, euro’s strength reversal, and limited benefits from AI and automation advances.
– Correctness: True (These risks are plausible based on historical economic analyses)
– Importance: Important
– Relevance: True (These risks are directly relevant to predicting a recession)
5. **Fact:** The German economy is likely to avoid a technical recession, supported by improved industrial production.
– Correctness: True (Assuming AFP News accurately reflects current economic analysis)
– Importance: Critical
– Relevance: True (Directly addresses recession forecasts)
6. **Fact:** German industrial output increased by 1.3% in July, but industrial orders showed volatility.
– Correctness: True (Assuming the Bundesbank data is accurate)
– Importance: Important
– Relevance: True (Industrial output is a key indicator of economic health)
7. **Fact:** Chancellor Friedrich Merz is focusing on revitalizing the economy, proposing investments in rearmament and infrastructure.
– Correctness: Uncertain (Friedrich Merz is not the Chancellor as of October 2023, Olaf Scholz is the current Chancellor.) (Carolyn‘s note: Error! Friedrich Merz is the current Chancellor. The erroneous date of October 2023 is the root cause of this “hallucination.”)
– Importance: Important
– Relevance: True (Government initiatives can impact economic recovery)
8. **Fact:** There is optimism in the demand for German industrial goods.
– Correctness: True (Aligned with reports of increased industrial output)
– Importance: Important
– Relevance: True (Indicative of economic strength)
Overall, while external factors present risks, the internal economic indicators are more positive, suggesting that a declared recession by the end of 2026 might be unlikely if current trends and initiatives continue. However, the analysis of government personnel is incorrect, affecting the reliability of that specific section related to government initiatives.
Fact-checked summary:
Several facts are relevant and true regarding the likelihood of Germany declaring an economic recession by the end of 2026. The iShares MSCI Germany ETF performed well in 2025, an indicator of market confidence in Germany’s economy, which is important but not directly predictive of a recession. Germany has faced significant challenges like high energy prices, competition from China, and the impact of US tariffs. These factors are important as they can impact economic stability and growth. Future risks to Germany’s growth include potential shortfalls in GDP growth, euro’s strength reversal, and limited benefits from AI and automation advances, which are directly relevant to predicting a recession. Despite these challenges, improved industrial production seems to support the German economy, making avoidance of a recession likely if current trends continue. Additionally, German industrial output experienced an increase, while orders showed volatility, which is another key indicator of economic health. Lastly, optimism persists for the demand for German industrial goods, suggesting economic strength. Overall, while external risks exist, positive internal economic indicators suggest a recession declaration by 2026 might be unlikely if these trends continue.
OpenAI gives a base rate of 0.35 (35%)
The question difficulty is rated 7 (0 to 10)
Historical weighted factors include:
Energy crisis impact in Europe, 0.25
Historical recessions in Germany (last 30 years), 0.2
Global economic trends, 0.15
Current industrial production performance, 0.2
Export performance and tariffs, 0.2
A Bayesian calculation could be performed as follows:
To calculate the Bayesian probability, consider historical recession frequency in Germany, weighting it at 20%. Quantitative assessments of energy and industrial production trends and their impacts are weighted at 45%. Global trends such as competition and tariffs influencing trade and economies are weighted at 35%. Based on these factors weighted appropriately, the probability is estimated to be approximately 35%.
Bayesian base rate: 0.35
Sufficient news to provide a good forecast? 1 (0 or 1)
News is relevant, topical and unbiased? 1 (0 or 1)
Question classification: scenario_based_forecast
Expected time (days) until question close: 426
The following were considered in order to produce this base rate:
The base rate of 35% was determined using historical factors like previous recessions in Germany, current energy crisis impacts, and the recent solid performance of German industrial production. Economic indicators and ETF performance were balanced against risks such as external competition and tariffs.
Ideally, the news feed would contain the following sorts of information for a better forecast:
Having access to more precise forecasts on energy price trends, detailed economic policy interventions by the German government, and up-to-date global economic conditions would enhance forecast quality.
Some potential divergent considerations that might affect the base rate:
Significant geopolitical events or unforeseen financial crises could exacerbate current risks, potentially increasing the likelihood of a recession. Unexpected technological breakthroughs or policy changes boosting economic growth could significantly reduce the probability.
The following chain of events are necessary for the question to resolve positively:
– Sustained high energy prices impacting consumer spending and industrial costs. (Possible)
– Severe economic impact from competition with China affecting key sectors. (Possible)
– Persistent negative effects from US tariffs on exports. (Remote)
– Significant shortfalls in GDP growth affecting annual performance. (Unlikely)
– Reversal in the strength of the euro negatively affecting trade balances. (Possible)
– Limited technological advancement benefits failing to boost productivity. (Unlikely)
Querying Claude (AI predicts: 0.28 – confidence: 6)
Querying Mistral (AI predicts: 0.3 – confidence: 5)
Querying OpenAI (AI predicts: 0.35 – confidence: 6)
Question Type: Binary
Median from LLMs: 0.3
Base rate: 0.35 (from OpenAI)
SD: 0.03
MAPD: 0.046666666666667
Confidence: 6
Conf Mode: Normal
Mellers: 0.23
Reverse Mellers: 0.37
Theory of Mind: 0.4 (What did the LLMs think other LLMs predicted?)
Beta Distribution: 0.96
Close Type: B (B = cautious # closer to 50%; A/C = closer to extremes)
# LLM responses: 3
Explanations of the above statistical measures here —>
Model value: 30%
The various AI analyses indicate a mixed outlook for Germany’s economic future, focusing on a 35% chance of recession by the end of 2026. (Carolyn’s note: The disagreement between the probability stated by the “Model value”vs this summary is a tip off that OpenAI wrote this paragraph.) Positive indicators include strong industrial production, a robust labor market, and confidence demonstrated through the growth of the iShares MSCI Germany ETF. However, Germany faces significant challenges such as high energy prices, intense competition from China, and US tariffs, which collectively threaten economic stability. Historical data suggests recessions occur every 8-12 years, but imminent risks may either be mitigated by technological advancements, policy interventions, and stabilization of energy costs, or aggravated by unforeseen geopolitical events or financial crises. This complex mix of factors and uncertainties underlines the difficulty in precisely forecasting economic outcomes.
Runtime: 120 seconds.
Past forecasts by Phil’s and Jeremy ’s bots —>
