Germany drastically revises its economic ambitions in the face of the global energy shock

The German government has lowered its growth forecasts for 2026 and 2027, while raising its inflation expectations, according to a source close to the matter. This revision comes amid heightened energy tensions related to the war in Iran, which is weighing heavily on the country's economic outlook.

For 2026, Berlin now forecasts growth of just 0,5%, down from 1,0% previously. The outlook for 2027 has also been revised downward, with the estimate lowered to 0,9%, compared to 1,3% previously. These adjustments reflect a significant expected slowdown in the German economy.

Rising oil and gas prices, fueled by the conflict in the Middle East, are a key factor in this deterioration of the forecast. As Europe's largest economy, heavily reliant on energy imports, Germany is particularly vulnerable to fluctuations in energy markets.

This rise in energy costs is also expected to fuel inflation, complicating the task of economic and monetary authorities. Higher inflation could weigh on household consumption and the competitiveness of businesses, which are already facing an uncertain international environment.

This downward revision comes as the German economy struggles to regain sustained growth after several years marked by successive shocks. The combination of weak growth and persistent inflation could exacerbate economic challenges in the coming months.

In this context, the German government will have to adjust its policies to try to support economic activity while limiting the effects of rising prices. The evolution of the conflict in Iran will remain a determining factor for the country's economy and, more broadly, for the entire eurozone.