German Business Outlook Sinks as Iran War Puts Recovery ‘on Ice’

Article content(Bloomberg) — Germany’s business outlook soured as higher energy prices due to the Iran war threaten to derail its nascent economic revival.Sign In or Create an AccountEmail AddressContinueor View more offersArticle contentAn expectations index by the Ifo institute dropped to 86 from a revised 90.2 — the lowest in more than a year. That was in line with the expectations of analysts in a Bloomberg survey. A gauge measuring current conditions unexpectedly held steady.Article contentWe apologize, but this video has failed to load.Try refreshing your browser, ortap here to see other videos from our team.Article content“The war in Iran has put any hope of a recovery on ice for the time being,” Ifo President Clemens Fuest said Wednesday in a statement. “Uncertainty among companies has increased noticeably.”Article contentArticle contentGermany’s most closely watched sentiment gauge is signaling that Europe’s largest economy — which only just managed to snap two years of contraction in 2025 — is headed for another rough patch.Article contentTop StoriesGet the latest headlines, breaking news and columns.There was an error, please provide a valid email address.Sign UpBy signing up you consent to receive the above newsletter from Postmedia Network Inc.Thanks for signing up!A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againInterested in more newsletters? Browse here.Article contentWhile a splurge on infrastructure and defense was meant to perk up output and encourage spending, events in the Middle East are making that outcome less likely by the day.Article contentThe chemicals industry, for one, has warned of shockwaves from the conflict as supply squeezes and costlier energy prompt firms to restrain output. Consumption is also set to suffer as inflation broadens from petrol stations to everyday products.Article contentBundesbank President Joachim Nagel has called on Germany’s government to do everything in its power “to seize the opportunities for economic growth that are within our control,” urging reforms and forward-looking investments.Article contentBut higher interest rates could be coming in response to the Iran war. Nagel has indicated that a hike could arrive as soon as April’s policy meeting, with President Christine Lagarde saying Wednesday that the ECB won’t be “paralyzed by hesitation.”Article contentEconomists surveyed by Bloomberg predict Germany’s economy will expand of just 1% this year — an outlook that’s probably now subject to severe downside risks.Article content“We could be sliding into a dramatic situation that threatens this economic upswing we’ve just begun to see,” Vice Chancellor Lars Klingbeil said Sunday.Article contentInvestors have already sounded the alarm. Confidence worsened far more than expected in March amid doubts that the economy can emerge unscathed.Article content—With assistance from Michael Nienaber, Joel Rinneby, Harumi Ichikura, Kristian Siedenburg and Zoe Schneeweiss.Article contentTrending JPMorgan sees 'national security risk' in old grid networks PMN Business Posthaste: Canada's troubled housing market just got hit with another headwind News Despite growing financial pressures, Canadians are still reliably paying their mortgages Mortgages Smith calls for new southbound pipelines, says U.S. could call 'first dibs' on Canadian oil exports Oil & Gas Oil and gas supply chain is about to snap, warns energy economist Peter Tertzakian Oil & Gas Share this article in your social networkCommentsYou must be logged in to join the discussion or read more comments.Create an AccountSign in Join the Conversation Postmedia is committed to maintaining a lively but civil forum for discussion. Please keep comments relevant and respectful. Comments may take up to an hour to appear on the site. You will receive an email if there is a reply to your comment, an update to a thread you follow or if a user you follow comments. Visit our Community Guidelines for more information. JPMorgan sees 'national security risk' in old grid networks PMN Business Posthaste: Canada's troubled housing market just got hit with another headwind News Despite growing financial pressures, Canadians are still reliably paying their mortgages Mortgages Smith calls for new southbound pipelines, says U.S. could call 'first dibs' on Canadian oil exports Oil & Gas Oil and gas supply chain is about to snap, warns energy economist Peter Tertzakian Oil & Gas