German economy to take a Q2 hit from the Iran war, ministry says
Germany's economy ministry said the Iran war will weigh on growth in the second quarter through higher energy bills, shipping disruptions and delayed orders. The hit is concentrated in industry and exports, the two engines of the German economy. Berlin is preparing budget measures to support recovery later in the year.
Germany's economy ministry warned that the Iran war will clearly weaken growth in the second quarter. The ministry said higher gas and electricity bills were inflating industrial costs, with chemical and metals producers cutting output for now. Some large suppliers were said to be holding back container orders bound for Asia that cannot get through reliably.
Exports are also being squeezed by risks around the Suez transit and by higher insurance premiums in Gulf waters. Carmakers and machinery groups are pushing chip shortages and delays in some rare raw materials into their shipping plans. The ministry sees a mild recovery as possible in the third quarter.
The coalition government is debating an expanded subsidy package for energy-intensive sectors before year-end and longer bridging loans for small and medium-sized firms. Bundesbank data already show household consumption painting a cautious picture. Berlin is assuming the European Central Bank will not signal an early rate cut while inflation pressure remains.
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