Germany has warned of a possible economic slowdown due to the war in Iran

The German government has warned of a possible slowdown in economic growth as early as this spring due to the escalation of the conflict in the Middle East, particularly a war in Iran. Officials in Berlin note that such an escalation could affect energy markets, logistics, and the overall stability of the global economy, posing additional risks to the German economy.

Spiegel reports on this.

The German Ministry of Economy’s monthly report states that the government expects a war in Iran to cause a downturn in the German economy this spring. 

Rising prices, supply chain issues, and uncertainty are negatively affecting sentiment among both businesses and households.

"Further economic development depends on how long the conflict in the Middle East lasts and how long trade routes and production capacities remain disrupted," the ministry’s forecast states.

However, it also notes that even after the situation improves, the effects on energy and raw material prices, as well as on supply chains, are likely to be felt for some time.

It also highlights that higher inflation is likely to make consumers more cautious. 

"Sentiment has recently deteriorated noticeably again, indicating a significant slowdown in consumer spending in the second quarter of 2026," the statement reads.

In particular, it is emphasized that high energy costs resulting from the war in Iran led to inflation rising to 2.9% in April—the highest level since January 2024.

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