Germany Warns of Q2 Slowdown as Iran War Drives Energy Costs, After Halving 2026 Growth to 0.5%
Updated
Updated · DW (English) · May 15
Germany Warns of Q2 Slowdown as Iran War Drives Energy Costs, After Halving 2026 Growth to 0.5%
12 articles · Updated · DW (English) · May 15
Berlin said the economy will slow significantly in the second quarter, with the Iran war pushing up energy and raw-material prices and disrupting supply chains.
0.3% first-quarter GDP growth had given Europe’s largest economy a stronger-than-expected start, but the Economy Ministry said business and household sentiment is now being hit by higher costs and uncertainty.
15.2% production declines since February 2022 in energy-intensive sectors including chemicals, paper, glass and metals have been accompanied by 53,300 job losses, according to the Federal Statistical Office.
Minus 28.4 was the Ifo housing-construction climate reading in April, down from minus 19.3 in March and the weakest level in four years as financing costs and fragile supply chains add pressure.
The warning comes less than a month after the government cut its full-year 2026 growth forecast in half to 0.5%, saying the duration of the Middle East conflict will shape the depth of the hit.
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Germany’s Economic Standstill: How the 2026 Iran War and Energy Crisis Threaten Industrial Competitiveness and Eurozone Stability
Overview
The ongoing Iran war has created major challenges for Germany’s economy, leading to downgraded forecasts and growing uncertainty. As the conflict disrupts global energy markets, Germany faces rising prices, supply chain problems, and weakened business and household confidence. These pressures are reflected in economic indicators, which now signal heightened uncertainty for the first time in months. The outlook for Germany depends heavily on how the Middle East conflict evolves, as further instability could worsen the situation. Overall, the war’s impact on energy and trade routes is a key driver behind Germany’s current economic headwinds and uncertain future.