Germany Halves GDP Growth Forecast

Germany cut its 2026 growth forecast to 0.5% on April 22, down from 1% in January, after the Iran war pushed up oil and gas prices. (reuters.com) The economy ministry also lowered its 2027 forecast to 0.9% from 1.3% and raised its inflation outlook, saying higher energy costs were hitting industry and households across Europe’s biggest economy. (reuters.com) Economy Minister Katherina Reiche presented the new numbers in Berlin and said the recovery expected for 2026 was being held back again by an external geopolitical shock. (finance.yahoo.com) Germany is especially exposed when oil and gas prices jump because its manufacturers, freight networks and many households still depend on imported energy for transport, heating and heavy industry. (euronews.com) The downgrade lands after two weak years for the German economy and as exporters face slower global demand and tougher competition, especially in chemicals, machinery and autos. (usnews.com) Those government forecasts closely follow Germany’s leading economic institutes, which last week cut their own 2026 projection to 0.6% from 1.3%. (usnews.com) Chancellor Friedrich Merz’s coalition responded on April 13 with €1.6 billion in fuel-price relief for consumers and businesses after a dispute inside the government over how to cushion the energy shock. (reuters.com) Merz said more support could follow if prices stay high, while the package already includes lower fuel taxes and room for employers to pay tax-free bonuses to workers. (france24.com) For now, Berlin is still forecasting growth, not recession. But the new 0.5% figure shows how quickly an external energy shock can cut into Germany’s recovery plans. (bloomberg.com)