By Andreas Plecko
DOW JONES—The Leibniz Institute for Economic Research Halle (IWH) sees the German economy on a moderate recovery path despite significant global pressures. In their latest economic forecast, the Halle economists expect real growth in gross domestic product (GDP) of 0.9 percent for both 2026 and 2027. The institute is thus adapting its expectations to a volatile global economic environment. The institute had previously predicted GDP growth of 0.7 percent for 2026 and 1.0 percent for 2027.
The Gulf War drove up energy prices massively and caused consumer prices to rise worldwide. At the beginning of the year, there seemed to be signs of a moderate upturn for the German economy. However, whether 2026 will be a real year of upswing seems very doubtful again in the summer, explains the institute. The increased energy prices are increasing companies’ production costs, putting pressure on the real income of private households and the looming energy crisis is gnawing away at economic confidence.
“The main risk for the global economy as well as for the German economy lies in the uncertain progress of the Gulf conflict,” said Oliver Holtemöller, head of the macroeconomics department and vice president of the IWH. If the Strait of Hormuz were to remain closed over the summer, oil would become significantly more expensive and higher inflation rates and interest rates would be expected. A setback for German exports would also be likely.
Under these conditions, German economic performance would at best stagnate in 2026. “In addition, the implementation of artificial intelligence brings with it upside and downside risks,” added Holtemöller. There is a chance that AI will significantly increase overall economic productivity. In the short term, however, the downside risks could predominate, for example due to structural job losses, which could also affect people with fairly high qualifications as a result of this change.
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June 11, 2026 09:01 ET (13:01 GMT)