The Institute for Economic Research Halle (IWH) believes that the German economy could experience a temporary contraction this year amid the recent escalation between Iran and Israel. While their economists have raised their economic forecasts, they anticipate that the Gross Domestic Product (GDP) will grow by 0.9 percent in both this and next year, according to a report from “Handelsblatt.” However, this year’s growth has been fueled by a surprisingly positive start to the year. The IWH now expects stagnation for the second quarter. This projection is based on the assumption that the Strait of Hormuz will reopen and that energy prices will ease. IWH Vice President Oliver Holtemöller stated that should the conflict escalate further, leading to even higher energy prices, a temporary decline in economic activity in Germany could occur.
Economy / Finance
