By Maria Martinez
BERLIN, April 22 (Reuters) – Germany’s economy ministry on Wednesday revised its growth forecasts for 2026 and 2027 downward and raised its inflation projections, as the Iran war drives up oil and gas prices.
The government now expects 0.5% growth for 2026, down from an earlier projection of 1.0%, and cut its 2027 growth outlook to 0.9% from 1.3%, confirming a Reuters report on Thursday.
“The economic recovery expected for this year is once again being held back by external geopolitical shocks,” Economy Minister Katherina Reiche said.
The war in Iran is driving up energy and raw material prices, the minister said, placing financial strain on private households and increasing costs for Germany’s economy.
The ministry now expects inflation to accelerate to 2.7% this year and 2.8% in 2027, up from 2.2% last year.
In addition to the war in Iran, international trade faces headwinds from protectionist measures and economic fragmentation, hindering Germany’s export-oriented economy from leveraging foreign trade to boost growth.
Exports are not expected to rise year-on-year until 2027, when they are forecast to increase by 1.3%.
Imports are expected to grow faster, rising by 1.8% in 2027, which would narrow Germany’s trade surplus.
Europe’s largest economy has been struggling since the pandemic to regain momentum. Heightened competition from China and higher energy costs are posing significant challenges its export-driven economic model.
(Reporting by Maria Martinez, editing by Kirsti Knolle)