GERMANY FORCASTS GLOOM – German institutes cut 2026, 2027 growth forecasts, raise inflation outlook
Germany’s leading economic institutes cut their growth forecasts for this year and next and sharply raised their forecasts for inflation as the Iran war causes oil and gas prices to surge.
The five institutes slashed their joint 2026 economic growth forecast to 0.6% from the 1.3% projected in September and lowered their 2027 growth outlook to 0.9% from a prior estimate of 1.4%.
They forecast inflation would be 2.8% in Germany in 2026 and 2.9% in 2027, up from previous projections of 2.0% and 2.3% respectively.
A spike in oil and gas prices following the start on February 28 of the U.S.-Israeli war on Iran has already helped push German inflation to 2.8% in March.
Last year, Germany’s parliament approved plans for a massive increase in government spending, throwing off decades of fiscal conservatism in the hope of reviving economic growth and scaling up military spending.
But the institutes said in Wednesday’s report that industry is hampered by a barely expanding international business, reflecting declining competitiveness, high geopolitical uncertainty and trade policy burdens.
