Germany warns economy could slow due to Iran war

The German government has warned that the country’s economy could slow as early as this spring amid escalating tensions in Iran.

The German Federal Ministry for Economic Affairs said key risks include rising prices, disruptions in supply chains, and weakening business and consumer sentiment, Caliber.Az reports, citing German media.

It noted that further economic development “depends on how long the conflict in the Middle East lasts and how long trade routes and production capacities remain disrupted.”

Officials also warned that even after the situation stabilises, the impact on energy and raw material prices, as well as supply chains, could persist for a prolonged period.

The ministry added that rising inflation could force consumers to reduce spending.

“Sentiment has recently deteriorated noticeably again, indicating a significant slowdown in consumer spending in the second quarter of 2026,” it stressed.

According to the report, higher energy prices linked to the Iran conflict have already pushed inflation in Germany to 2.9% in April, the highest level since January 2024.

By Bakhtiyar Abbasov