Given the effects of the war, the business climate is… Iran has fallen to its lowest level since the times of the corona pandemic. The sentiment index of the Munich ifo Institute fell to 84.4 points in April, after 86.3 points in March. Before the start of the Iran War, the German economy was still hopeful. The mood in the German economy is deteriorating sharply, and the companies surveyed by the institute rated their current business and future expectations worse than in the previous month.
“The Iranian crisis is hitting the German economy hard,” said Ifo President Clemens Fuest. “Hopes for an upswing are gone for the time being.” A total of 9,000 companies were surveyed. The head of the Munich Institute’s survey, Klaus Wohlrabe, initially only expects economic performance to stagnate.
Expected in the manufacturing sector according to the ifo Institute the chemical industry in particular faces a difficult future development. But numerous companies reported in view of the blockade of the Strait of Hormuz of worries about delivery bottlenecks. In the service sector, logistics in particular was under pressure. The retail sector is particularly struggling with consumer reluctance in the face of inflation.
“The collapse in the ifo business climate clearly shows how badly the energy price shock is hitting the German economy,” said Commerzbank chief economist Jörg Krämer. Growth is expected to be 0.4 percentage points lower in 2026 when the Strait of Hormuz reopens at the end of May after a total of three months. For this scenario he expects growth of 0.6 percent. “But every additional day without oil deliveries through the Strait of Hormuz increases the risk of recession.”