BERLIN, March 26 (Reuters) - A prolonged Iran war could bring German economic growth close to a standstill this year, the IMK institute said on Thursday. If the conflict in the Middle East drags on or
IMK: Iran Conflict Risks Stalling Germany’s Economic Growth in 2026
IMK Institute Warns of Economic Impact from Prolonged Iran Conflict
Potential Scenarios for German Economic Growth
BERLIN, March 26 (Reuters) - A prolonged Iran war could bring German economic growth close to a standstill this year, the IMK institute said on Thursday.
If the conflict in the Middle East drags on or escalates, gross domestic product would grow by just 0.2%, the Macroeconomic Policy Institute (IMK) said in a risk scenario. The economy would then expand by 1.4% next year.
In December, IMK economists had projected growth of 1.2% for 2026.
Expert Commentary on Economic Risks
"In February, we were still thinking about raising our 2026 forecast because the signals were becoming increasingly positive," IMK director Sebastian Dullien said. "The economic effects of the war are now at least partly spoiling that and, in the worst case, could intensify the risk of deindustrialisation in Germany."
Main Scenario Versus Risk Scenario
In its main scenario, IMK forecasts growth of 0.9% in 2026, assuming the war does not last beyond the summer and higher energy prices ease. On that basis, the economy would grow by 1.6% in 2027.
Energy Prices and Inflation Outlook
The institute expects the current rise in energy prices to recede by the end of the year, allowing the positive effects of public investment and private consumption to outweigh the drag from the second half onward.
Inflation would then average 2.4% in 2026 before falling to 1.7% in 2027. In the risk scenario, by contrast, inflation would rise to 3.1% this year.
Reporting and Editorial Information
(Reporting by Klaus Lauer, writing by Maria Martinez, editing by Friederike Heine)
