German institutes to cut 2026 economic growth forecasts amid the Iranian war, Reuters sources suggest; 2026 growth outlook seen at 0.6% (prev. 1.2%), 2027 growth seen at 0.9% (prev. 1.4%)
- CPI is seen at 2.8% for 2026 and 2027.
- Iranian war and energy costs were cited as the reasons for the cuts.
Context
The downward revision of Germany's growth forecasts for 2026 and 2027, stemming from the impacts of the Iranian war and rising energy costs, highlights a deteriorating economic outlook. This cut from 1.2% to 0.6% for 2026 suggests potential headwinds for GDP, likely influencing policy considerations and market sentiment in Europe as inflation expectations remain anchored at 2.8%.
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