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The German government has halved its forecast for economic growth in 2026 to 0.5%, down from 1% in its last report in January, as a result of surging energy prices due to the war in Iran.<\/p>\n
Economy Minister Katherina Reiche presented the new forecast in Berlin on Wednesday, dampening hopes for a strong recovery for Europe’s largest economy this year.<\/p>\n
“The economic recovery expected for this year is once again being held back by external geopolitical shocks,” Reiche said.<\/p>\n
“The war in Iran is driving up energy and raw material prices. This is putting a strain on private households and increasing costs for the German economy.”<\/p>\n
For 2027, the government expects growth of 0.9%, however this is associated with “considerable uncertainties,” and depends largely on how the conflict in the Middle East unfolds, Reiche said.<\/p>\n
Oil and gas prices have soared in recent months due to the conflict in the Middle East and Iran’s blockade of the Strait of Hormuz, a key waterway for global fossil fuel supplies.<\/p>\n
Inflation has climbed across Europe, including in Germany, where consumer prices were up 2.7% in March.<\/p>\n<\/p><\/div>\n