Frankfurt: Germany's economy could suffer a 40 billion euro ($46.4 billion) hit from the Iran war over the next two years, projections from the IW German Economic Institute showed on Thursday, as higher oil prices threaten to choke off economic recovery.
While actual trade with Iran has been in decline for years, Germany is still exposed via its dependency on energy prices and imports, the institute said, with an expected rise in oil prices in focus.
The escalating conflict in the Middle East has "serious implications" for economic development, IW says.
An increase in the price of brent crude oil to $100 per barrel would cost Germany's economy 0.3% of gross domestic product (GDP) in 2026 and 0.6% in 2027.
This would represent a loss of economic output amounting to around 40 billion euros over two years, IW says.
If oil prices were to rise to $150 per barrel it could even shave 0.5 and 1.3 percentage points off Germany's GDP in 2026 and 2027, respectively, which would result in hit of more than 80 billion euros.
While actual trade with Iran has been in decline for years, Germany is still exposed via its dependency on energy prices and imports, the institute said, with an expected rise in oil prices in focus.
The escalating conflict in the Middle East has "serious implications" for economic development, IW says.
An increase in the price of brent crude oil to $100 per barrel would cost Germany's economy 0.3% of gross domestic product (GDP) in 2026 and 0.6% in 2027.
This would represent a loss of economic output amounting to around 40 billion euros over two years, IW says.
If oil prices were to rise to $150 per barrel it could even shave 0.5 and 1.3 percentage points off Germany's GDP in 2026 and 2027, respectively, which would result in hit of more than 80 billion euros.
