Middle East war triggers energy price surge, disrupts Germany's economic rebound
Germany has slashed its economic growth forecast for the year from 1% to 0.5% as surging oil prices from the Middle East conflict disrupt the country's economic recovery.
📋 Article Processing Timeline
- 📰 Published: April 25, 2026 at 19:16
- 🔍 Collected: April 25, 2026 at 19:31 (14 min after Published)
- 🤖 AI Analyzed: April 25, 2026 at 19:36 (5 min after Collected)
(Central News Agency, Berlin, 24th, comprehensive foreign dispatch) The Middle East war has caused a surge in international oil prices, disrupting Germany's path to economic rebound. Authorities in Berlin have revised down their economic growth forecasts for this year and next, while government officials are struggling to find ways to mitigate the impact of rising energy prices.
According to the US financial media CNBC, before the outbreak of the Middle East war, Germany benefited from defense and infrastructure spending. Not only did industrial orders increase and corporate inventories decline, but economic sentiment also improved.
However, Carsten Brzeski, global head of macroeconomic research at ING, pointed out that high energy prices and supply chain risks "spoiled the party mood before the German (economic) growth party even started."
The Federal Ministry for Economic Affairs and Energy of Germany slashed its economic growth forecast for Germany this year by half this week, from 1% to 0.5%; the growth forecast for next year was also revised down from 1.3% to 0.9%. At the same time, it is predicted that the inflation rate will reach 2.7% this year and 2.8% next year.
Brzeski pointed out that German industrial production had already shown signs of "stumbling" before the Middle East war broke out.
Germany's industrial production in February fell by 0.3% compared to the previous month; it was flat compared to the same period last year. Now, the Middle East conflict has caused corporate confidence to plummet rapidly.
The Ifo Institute, a German economic research institute, released its business climate index for April yesterday, which slid from 86.3 in March to 84.4, hitting the lowest level since the early days of the COVID-19 pandemic in May 2020.
Ifo Institute President Clemens Fuest told CNBC today: "What we are seeing is the German economy taking a heavy hit from the Iran crisis. Companies are telling us that the road ahead is full of difficulties."
According to ING's analysis, Germany remains one of the largest net energy importers in Europe, with about 6% of its energy coming from the Middle East; and "energy-intensive" industries, which employ nearly one million people, account for about 17% of total industrial gross value added.
Brent crude oil prices have soared by nearly 73% so far this year. To cushion the impact of high energy prices, the German ruling coalition agreed earlier this month to roll out short-term relief measures, proposing a reduction in gasoline and diesel energy taxes for two months, with a scale of about 1.6 billion euros.
German Minister for Economic Affairs and Energy Katherina Reiche stated that the federal government has taken "swift and decisive action to ease the burden (of high fuel prices)."
Brzeski noted that the war highlights Germany's over-reliance on energy imports. He told CNBC in an email: "It is a painful reminder that simply shifting the dependency from Russia to the Middle East is not a structural solution."
Brzeski stated that rising energy prices have distracted the government from structural reforms and shifted its focus to short-term subsidies, which "is not a very promising strategy."
He emphasized that Germany urgently needs a more resolute and autonomous long-term energy strategy. Whether it is fully investing in renewable energy or reconsidering nuclear power, "the point is that the government must come up with a long-term plan." (Compiler: Liu Shu-chin) 1150425
According to the US financial media CNBC, before the outbreak of the Middle East war, Germany benefited from defense and infrastructure spending. Not only did industrial orders increase and corporate inventories decline, but economic sentiment also improved.
However, Carsten Brzeski, global head of macroeconomic research at ING, pointed out that high energy prices and supply chain risks "spoiled the party mood before the German (economic) growth party even started."
The Federal Ministry for Economic Affairs and Energy of Germany slashed its economic growth forecast for Germany this year by half this week, from 1% to 0.5%; the growth forecast for next year was also revised down from 1.3% to 0.9%. At the same time, it is predicted that the inflation rate will reach 2.7% this year and 2.8% next year.
Brzeski pointed out that German industrial production had already shown signs of "stumbling" before the Middle East war broke out.
Germany's industrial production in February fell by 0.3% compared to the previous month; it was flat compared to the same period last year. Now, the Middle East conflict has caused corporate confidence to plummet rapidly.
The Ifo Institute, a German economic research institute, released its business climate index for April yesterday, which slid from 86.3 in March to 84.4, hitting the lowest level since the early days of the COVID-19 pandemic in May 2020.
Ifo Institute President Clemens Fuest told CNBC today: "What we are seeing is the German economy taking a heavy hit from the Iran crisis. Companies are telling us that the road ahead is full of difficulties."
According to ING's analysis, Germany remains one of the largest net energy importers in Europe, with about 6% of its energy coming from the Middle East; and "energy-intensive" industries, which employ nearly one million people, account for about 17% of total industrial gross value added.
Brent crude oil prices have soared by nearly 73% so far this year. To cushion the impact of high energy prices, the German ruling coalition agreed earlier this month to roll out short-term relief measures, proposing a reduction in gasoline and diesel energy taxes for two months, with a scale of about 1.6 billion euros.
German Minister for Economic Affairs and Energy Katherina Reiche stated that the federal government has taken "swift and decisive action to ease the burden (of high fuel prices)."
Brzeski noted that the war highlights Germany's over-reliance on energy imports. He told CNBC in an email: "It is a painful reminder that simply shifting the dependency from Russia to the Middle East is not a structural solution."
Brzeski stated that rising energy prices have distracted the government from structural reforms and shifted its focus to short-term subsidies, which "is not a very promising strategy."
He emphasized that Germany urgently needs a more resolute and autonomous long-term energy strategy. Whether it is fully investing in renewable energy or reconsidering nuclear power, "the point is that the government must come up with a long-term plan." (Compiler: Liu Shu-chin) 1150425