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2026-05-26 17:44:26
[Iran War Kills German Recovery Hopes; DIHK Lowers 2026 Growth Forecast from 1% to 0.3%] ⑴ A survey released Tuesday shows that the war in Iran is killing the nascent recovery hopes of the German economy at the beginning of the year. The survey of approximately 23,000 companies by the German Chamber of Commerce and Industry (DIHK) indicates that companies are as pessimistic about their situation as they were during the pandemic. ⑵ More than a quarter of companies described their situation as "bad," with only 23% considering it "good." Business outlooks have also deteriorated further, with one-third of respondents expecting business to worsen in the next 12 months, an increase of 8 percentage points from the beginning of the year, and only 13% remaining optimistic. ⑶ The managing director of the DIHK stated that Germany is facing a double crisis, compounded by structural problems and the economic consequences of the Middle East war. As a result, the organization lowered its 2026 German economic growth forecast from 1% at the beginning of the year to 0.3%. ⑷ Another survey released Tuesday by the Ifo Institute for Economic Research shows that sentiment in the German export sector is also deteriorating. The head of the Ifo Institute's forecasting department pointed out that geopolitical uncertainty remains high, and the export outlook remains challenging. (5) From a trading psychology perspective, German companies' pessimism about the medium- to long-term outlook has significantly intensified, with high imported energy costs and supply chain disruptions continuing to suppress business confidence. Even though previous expectations of a peace agreement had boosted the market, the actual feelings of businesses have not improved accordingly, and the risk of the German economy falling into low growth or even stagnation is increasing.
