How Germany’s investment gap could be its biggest opportunity

Germany is well positioned to turn its current investment shortfall into a powerful new growth cycle, according to a report published by Allianz Research ahead of the German government's “Invest in Germany summit”.The study finds the country's enduring strengths outweigh its recent weakness, confirming its value as an investment destination.

Germany combines economic scale, export strength, top-tier creditworthiness, world-class research and a uniquely strong “Mittelstand.” It remains the EU's largest economy and the world's third-largest exporter, is the only G7 country rated ‘AAA’ by all three major agencies and spends 3.1% of GDP on research and development. Its “Mittelstand” includes some 1,700 hidden champions – many of them world market leaders that generate around 25% of German exports. This combination creates a strong platform for a return to growth.

What has been missing is investment. Between 2019 and 2025, aggregate investment in Germany fell by 6.4%, while it rose by 6.7% in the rest of the eurozone and by 20.2% in the U.S. This leaves an investment gap of around EUR390bn relative to the eurozone and up to EUR730bn relative to the U.S. High energy costs, the OECD's second-highest tax wedge, excessive bureaucracy and high corporate borrowing costs are to blame. Initial reforms have released funding worth hundreds of billions of euros for infrastructure, defense, energy and digitalization, and years of capital scarcity have already raised the potential returns on new investment.

“For an investor, Germany represents a compelling opportunity: industrial strength, stable institutions, scalability, leading research, and highly skilled talent,” said Andreas Wimmer, Member of the Board of Management at Allianz SE. “But the investment gap of up to EUR730bn that has opened in recent years shows that investment does not manifest on potential alone. Germany needs to simplify and speed up, reducing regulation, providing faster approvals, and creating attractive public-private projects to mobilize its vast private capitals resources.

Allianz has been a part of Germany’s economic history since 1890. Today, we invest approximately EUR100bn across the country covering a wide range of investments, including infrastructure, wind parks, or power networks. If Germany implements the necessary reforms with urgency and predictability, it can turn years of underinvestment into a powerful new growth cycle.”

German households hold around EUR9trn in financial assets, including EUR3.4trn in cash and bank deposits. Redirecting these funds into capital markets is essential. Shifting just 5% of household financial assets out of deposits into productive investment would mobilize around EUR450bn. The state-subsidized private pension account, or “Altersvorsorgedepot,” launching in January 2027, could become the catalyst for a new investment mindset in Germany.

“To attract this capital, Germany needs to focus on four key prerequisites: faster and simpler permitting and procurement; clear standards for public-private partnerships; pension reforms, to create a pool of patient, long-term capital; and standardized investment structures, including blended finance to ensure more stable cash flows for riskier investments,” explained Ludovic Subran, Chief Economist and Chief Investment Officer at Allianz SE.

The “Deutschlandfonds,” started in December 2025 with around EUR30bn in public guarantees aimed at unlocking around EUR130bn in total investment is a good example of how to target private investors’ need for a public backstop to take on risk. 

Allianz has identified several major opportunities for investment. The energy transition requires around EUR1.3trn by 2045 (roughly 30% of 2025 GDP) in renewables, grids, storage and hydrogen. Digital infrastructure, including AI data centers, needs EUR275–500bn by 2030, with multiyear grid-connection queues now the main constraint. Transport will receive EUR166bn in federal government support between 2025 and 2029. Defense financing is expected to reach around EUR734bn over five years.

Allianz is already putting its own balance-sheet capital to work in Germany. With total exposure of approximately EUR100bn, 12% of its global EUR791bn investment portfolio (as of June 30, 2026), Allianz is one of the country's largest institutional investors. The portfolio spans debt, equities, real estate and infrastructure, including transmission systems, wind farms, and battery storage. 

In addition, Allianz’s asset managers PIMCO and Allianz Global Investors invest significantly in Germany on behalf of third-party clients, including investments in large-scale energy and digital infrastructure projects.