DIW economic barometer: Iran war stops the German economy's upswing

After the economy finally seemed to recover, it has stagnated again since the Iran War. The geopolitical crises affect companies and private individuals.

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The Iran war is slowing the upward trend of the German economy. The DIW recorded a slight increase in the economic barometer, which, however, is below the four-year high in February. Nevertheless, it exceeds the previous year’s values. The geopolitical escalation is hitting the economy in a phase of recovery, said DIW economics chief Geraldine Dany Knedlik. Rising energy prices and uncertainty could further hamper the recovery.

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In February 2026, the economic barometer was at a four-year high. The Iran war is weakening the upward trend.
© Sina Schuldt/dpa

The upward trend of the German economy has been weakened by the Iran war. The economic barometer of the German Institute for Economic Research (DIW) rose slightly in April, but is below the four-year high in February. Nevertheless, it is still above last year’s values.

“The geopolitical escalation is hitting the German economy in a phase in which a dynamic recovery has just emerged,” said DIW economics director Geraldine Dany Knedlik. “Rising energy prices and the high level of uncertainty are likely to slow the further upswing.”

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