German institutes cut growth forecast as Iran war drives inflation higher
Germany's major economic institutes have cut their growth forecasts for 2026 and 2027 due to the Iran war and rising energy costs. The institutes now expect growth of 0.6% in 2026 and 0.9% in 2027, with inflation reaching 2.8% and 2.9% respectively.
Germany's five major economic institutes have downgraded growth forecasts for 2026 and 2027. The forecast for 2026 has been cut to 0.6% from 1.3%, and for 2027 to 0.9% from 1.4%. The institutes cite the Iran war and surging energy costs as the main reasons. Higher energy prices are expected to reduce Germany's income by about 50 billion euros over this year and next. The institutes forecast inflation at 2.8% in 2026 and 2.9% in 2027. They argue against government intervention to lower energy prices, instead advocating for targeted social compensation measures.
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