Germany Warns Iran War Could Weigh on Economic Growth in Q2

Germany’s economy is expected to face additional pressure during the second quarter of the year, with the federal economy ministry warning that the ongoing Iran conflict could significantly impact growth.

The warning comes after Germany recorded modest economic growth of just 0.3% in the first quarter, highlighting the fragile state of Europe’s largest economy.

Rising Costs and Uncertainty Pressure the Economy

According to the ministry’s latest monthly report, higher prices, supply chain disruptions and growing uncertainty are increasingly affecting both businesses and consumers.

Officials noted that worsening sentiment among households and companies may further slow economic activity in the coming months.

Iran Conflict Adds to Existing Economic Challenges

Germany has already been dealing with weaker growth momentum, and continued geopolitical tensions in the Middle East could intensify inflation pressures and disrupt global trade flows.

The ministry suggested that rising costs linked to the Iran conflict may negatively impact confidence, investment and overall economic performance during the second quarter.

As uncertainty remains elevated, investors and policymakers will closely monitor whether Germany can avoid a deeper slowdown later this year.