Losses Counted in Germany 0 10

The war in Iran will slow down Germany's economy - the hostilities in the Middle East will cost at least 0.2 percentage points of growth, according to the ifo Institute for Economic Research in Munich. Experts believe that if the conflict is resolved quickly, the growth forecast for the German economy in 2026 could remain at 0.8% compared to the previous year. Without the shock from rising energy prices, this forecast would have been raised to 1%.

However, if the war in Iran drags on, the growth forecast for the German economy in 2026 will have to be lowered to 0.6%, ifo reported. For 2027, Deutsche Welle reports that economists are looking more pessimistically: even with a quick resolution of the conflict, they now expect Germany's economy to grow by 0.8% instead of the previously projected 1.2%.

If oil and gas prices fall in the coming weeks, inflation in Germany will rise to about 2.5%. But if the global energy market remains volatile due to the war for a longer period, Germans may face inflation of nearly 3%, warns ifo.

In 2025, Germany's economy grew by 0.2% after two years of recession. It is threatened not only by rising oil and gas prices but also by disruptions in supply chains; for example, German shipping companies are forced to bypass the Persian Gulf, which slows down and increases transportation costs.