German think tank lowers economic expectations, Middle East conflict may halve growth to 0.6% this year.

According to the half-year forecast released by the German think tank IFO on Wednesday, Germany's economic growth rate this year will be less than half of what was expected a few months ago, due to the impact of the conflict in the Middle East. The research institution stated that the gross domestic product (GDP) will grow by 0.6% this year, a significant downward revision from the 1.3% forecasted in September last year, as inflation accelerated and suppressed private consumption. They predict that the GDP will grow by 0.9% in 2027. At the same time, the institution forecasted that the consumer price index may rise by 2.8% this year and by 2.9% next year. The forecast leader Timo Wollmershaeuser said, "The energy price shocks caused by the war in Iran are seriously impacting the economic recovery. However, expansionary fiscal policies are supporting the domestic economy, preventing further significant decline." With the blockade of the Strait of Hormuz shaking the global oil and gas market and disrupting the supply chain, the hope for a rebound driven by expenditure in Europe's largest economy is becoming increasingly slim. As a result, Germany's inflation rate jumped to its highest level in over a year in March, and the sentiment index continues to deteriorate.