By Maria Martinez<\/p>\n
BERLIN, April 14 (Reuters) – The International Monetary Fund cut Germany’s growth forecasts for this year and next on Tuesday, in its largest downgrade among \u200cbig euro zone economies, and raised its inflation projections as the Iran war \u200cdrives up oil and gas prices.<\/p>\n
In its World Economic Outlook, the IMF expects German growth rates of 0.8% in \u200b2026 and 1.2% in 2027, down 0.3 percentage points for both years.<\/p>\n
For the euro area, growth of 1.1% in 2026 and 1.2% in 2027 is forecast, 0.2 percentage points less in each year than previously expected.<\/p>\n
The downward revision follows a cut by Germany’s leading economic institutes, which slashed their joint \u200c2026 growth forecast to 0.6% \u2060from 1.3% projected in September and lowered their 2027 forecast to 0.9% from 1.4%.<\/p>\n
Europe’s largest economy has struggled to regain momentum since the COVID \u2060pandemic, with rising competition from China and higher energy prices – even before the current spike – challenging its export-driven economic model.<\/p>\n
CONFLICT PUSHES INFLATION HIGHER<\/p>\n
The Iran conflict – the third major shock to hit the \u200bworld’s economy \u200bafter the COVID pandemic and Russia’s invasion of \u200bUkraine – will dominate this week’s gathering \u200cof finance officials at the IMF in Washington.<\/p>\n
A spike in oil and gas prices following the start of joint U.S.-Israeli strikes on Iran on February 28 pushed German inflation to 2.8% in March.<\/p>\n
The IMF forecasts inflation in Germany will rise to 2.7% this year, from 2.3% last year.<\/p>\n
Germany’s coalition government, which initially resisted calls to provide support, said on Monday it had \u200cagreed fuel price relief for consumers and businesses \u200bworth 1.6 billion euros ($1.88 billion) via cuts to levies \u200bon diesel and petrol.<\/p>\n
The IMF said governments \u200bshould avoid broad fuel price subsidies or tax cuts because they \u200care costly and difficult to roll back. \u200bIf support is unavoidable, \u200bgovernments should provide temporary, tightly targeted aid to vulnerable households instead, it said.<\/p>\n
Germany’s increase in public spending, previously praised by the IMF, should help the economy grow.<\/p>\n
However, trade \u200bpolicy uncertainty has increased markedly, \u200ccontributing to weaker investment incentives and tighter financial conditions, which will be only \u200bpartly offset by Germany’s fiscal stimulus, the IMF said in its report.<\/p>\n
($1 = 0.8491 \u200beuros)<\/p>\n
(Reporting by Maria Martinez; Editing by Susan Fenton)<\/p>\n","protected":false},"excerpt":{"rendered":"By Maria Martinez BERLIN, April 14 (Reuters) – The International Monetary Fund cut Germany’s growth forecasts for this…\n","protected":false},"author":2,"featured_media":4729,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[4829,445,5,1316,4827,4828,253,1318],"class_list":{"0":"post-4728","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-germany","8":"tag-german-growth-rates","9":"tag-german-inflation","10":"tag-germany","11":"tag-growth-forecasts","12":"tag-inflation-projections","13":"tag-international-monetary-fund","14":"tag-iran","15":"tag-oil-and-gas-prices"},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/posts\/4728","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/comments?post=4728"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/posts\/4728\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/media\/4729"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/media?parent=4728"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/categories?post=4728"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/germany\/wp-json\/wp\/v2\/tags?post=4728"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}