Private German banks now project 1.0 % GDP growth for the current year, a decrease of 0.4 percentage points from the forecast issued in the fall. They expect consumer prices to climb 2.6 % and see growth settling at 1.5 % in 2027.
The outlook, however, is punctuated by considerable uncertainty stemming from the war in Iran. The banks assume that global energy prices will start to decline again from May. In a “risk scenario” where oil prices stay elevated for months, the economic forecasters revise growth to only 0.6 % and inflation to more than 3 % in Germany.
“The key question is: When will the oil tankers resume passing through the Strait of Hormuz?” asked Felix Hüfner, chief economist for Germany at UBS Investment Bank and chair of the committee for economic and monetary policy of the banking association, as reported by “Welt am Sonntag”.
