DIW Halves German Growth Forecast Amid Energy Crisis
The DIW economic institute cut its 2026 growth forecast for Germany to 0.5 percent as rising energy prices from the Iran conflict impact household spending. Economists warn of a technical recession with output expected to contract through the third quarter.
Germany will likely enter a technical recession this year as DIW Berlin cut its 2026 growth forecast by 0.5 percentage points to 0.5%. This downward revision follows an energy price shock triggered by war in Iran that derailed a previous recovery. Investors face persistent inflation and contracting output through the third quarter as rising costs weaken household purchasing power.
DIW economists said on Wednesday that GDP will likely contract in both the second and third quarters. This forecast revision follows rising costs for Brent Crude Oil and Natural Gas. Higher energy prices are increasing corporate uncertainty across the industrial sector.
