Germany's economy is facing a negative revision of the growth forecast due to rising energy prices generated by the conflict with Iran.

Germany's economy, the largest in Europe, is in a difficult situation, with the Ministry of Economy reducing the economic growth forecast for 2026 to 0.5% and for 2027 to 0.9%, due to rising energy prices caused by the conflict with Iran.

Inflation is estimated at 2.7% for this year and 2.8% for the next year.

Economists warn that high energy prices and risks in supply chains severely affect the economy, and confidence indicators show a rapid deterioration of the economic climate. The Ifo index has reached its lowest level since May 2020, and economic sentiment is pessimistic.

The government has approved temporary tax cuts on fuels to mitigate the impact on consumers, but the issue of dependence on energy imports remains.

Analysts emphasize that, although the economic recovery is delayed, it is not completely compromised, but the outlook remains fragile without structural reforms and a long-term energy strategy.