German economic research institutes-including the Ifo Institute, the Institute for Macroeconomics at the Hans Böckler Foundation (IMK), the Forschungsinstitut RWI Berlin, and the IW Cologne-told Politico’s “Industrie und Handel” newsletter on Tuesday that they are expected to cut their forecasts because of the Iran conflict. The institutes anticipate a drag on Germany’s gross domestic product of between 0.2 and 1.0 percentage points, depending on how long the war lasts.
According to Ifo chief economist Timo Wollmershäuser, an inflation rate close to 2.5 % is likely if oil and gas prices fall again in the coming weeks. That would slow this year’s growth by roughly 0.2 percentage points, leaving Germany with an estimated 0.8 % growth in 2024 and 1.2 % in 2025. If fossil‑fuel prices remain sharply high for longer, he warns that inflation could reach 3 %, further reducing growth to 0.6 % this year and 0.8 % next year.
IMK’s scientific director Sebastian Dullien noted that before the war the trend had been to lift the 2026 growth outlook from 1.2 % to a slightly higher level. “That change has now been annulled” he said. He added that if oil falls quickly below $100 per barrel, the impact would likely be limited to a few tenths of a percentage point of growth loss. “But if the war continues and oil and LNG supplies remain disrupted for an extended period, the energy price shock could be large enough to stop Germany’s recovery”.
IW Cologne’s Samina Sultan observed that if oil prices stay at $100-or even $150-for two years, Germany’s 2027 GDP would be 0.6 to 1.0 % lower than it would have been without the price rise.
Finally, RWI expert Torsten Schmid offered a slightly more optimistic view: if oil and gas prices stay at current levels until the end of March and then gradually decline, the negative effect on GDP in 2026 would be about 0.2 percentage points.