German economic council cuts growth forecast as energy prices bite

BERLIN - The German Council of Economic Experts cut its growth forecast for Europe's largest economy on Wednesday, citing the impact of the Middle East conflict, higher energy prices and U.S. trade policy.

The economists now expect 0.5% growth this year, down from a November forecast of 0.9%, according to their spring report to the government.

For 2027, the panel forecasts growth of 0.8%.

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Higher energy prices are reducing household purchasing power and weighing on consumption, the economists said.

Inflation is expected to average 3.0% in 2026, up from 2.2% in 2025, before easing to 2.8% in 2027.

In a risk scenario in which oil prices rise to $120 per barrel and remain elevated until October 2026, the advisers said German growth could slow to 0.2% in 2026 and 0.5% in 2027, while inflation could rise further.

The council also warned that Germany's long-running economic weakness reflected structural problems, including weaker industrial competitiveness and demographic pressures.

(Reporting by Maria Martinez and Klaus Lauer, Editing by Linda Pasquini)

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This story was originally published May 27, 2026 at 4:09 AM.