GERMANY’S council of economic advisers cut its 2026 growth forecast on Wednesday, warning that the Middle East war, surging energy prices and persistent US trade protectionism were placing fresh strain on Europe’s largest economy after years of stagnation.
The German Council of Economic Experts, a panel of five economists appointed by the German president, said it now expected the economy to expand by just 0.5 per cent this year, down 0.4 percentage points from its previous forecast issued last autumn, with the revision driven primarily by the war in the Middle East.
“After a prolonged period of weak growth since 2019, the German economy is facing increased pressure to adapt as a result of recent geopolitical developments,” the council said in its spring economic outlook.
The war and the resulting sharp rise in crude oil and gas prices, along with US trade policy, were weighing on economic activity and eroding purchasing power through a deterioration in Germany’s terms of trade, it said.
The council warned that the main downside risk to the outlook was that the war could drag on longer and cause more severe economic disruption than currently assumed. — Xinhua