Germany's IfW Cuts 2026 Growth Outlook Amid Soaring Commodity Prices
IfW Institute Revises Economic Forecasts Due to Geopolitical Tensions
Impact of Iran Conflict on Commodity Prices
BERLIN, March 12 (Reuters) - Germany's IfW institute slightly lowered its 2026 economic forecast on Thursday based on expectations that commodity prices driven higher by the war in Iran will remain significantly elevated for only a few months.
"New headwinds threaten from the military conflict in Iran, which has noticeably driven up commodity prices," said the institute.
Consequences for Germany's GDP
In this scenario, a loss of purchasing power amounting to 0.6% of annual gross domestic product is projected for the current year, which will noticeably dampen economic activity but not cause it to collapse, said the Kiel-based institute.
As a result, GDP is now expected to grow by 0.8% this year, 0.2 percentage points less than what IfW had predicted in its winter forecast.
Long-Term Economic Recovery
The economy will slowly regain its footing over the course of the year, said the institute, which raised its growth forecast for next year to 1.4% from 1.3% previously.
Inflation Projections
Inflation this year, driven by higher energy prices, will rise significantly more sharply than expected in winter, reaching 2.5%, IfW said, which previously predicted 1.8%.
The inflation forecast for 2027 remained unchanged at 2.1%.
(Reporting by Miranda Murray, editing by Thomas Seythal)
