Germany could face $46 bln hit from Iran war as oil prices surge, IW says

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.