The German Council of Economic Experts has trimmed its forecast for the country's economic expansion, pointing to three broad headwinds: the conflict in the Middle East, elevated energy prices and changes in U.S. trade policy. In its spring report to the government, the council lowered its growth projection for the current year to 0.5% from a November estimate of 0.9%.
The panel projects growth of 0.8% in 2027. Alongside the growth revisions, the advisers expect inflation to average 3.0% in 2026, up from 2.2% in 2025, before moderating to 2.8% in 2027.
Pressure on households and consumption
According to the council, higher energy prices are eroding household purchasing power and putting a drag on consumption. The report explicitly links the recent jump in energy costs to weaker consumer spending, a channel through which geopolitical events and commodity price moves are transmitting to the broader economy.
Downside risk scenario
The council outlined a risk case in which oil prices rise to $120 per barrel and remain at that level until October 2026. Under that scenario the advisers said German growth could fall to 0.2% in 2026 and 0.5% in 2027, while inflation would be pushed higher than in their central projection.
Structural concerns
Beyond cyclical factors, the council warned that Germany's persistent economic weakness reflects structural issues. The report highlights weaker industrial competitiveness and demographic pressures as long-running constraints on growth. The advisers presented these structural elements as underlying factors that compound the near-term impact of external shocks such as energy price swings and trade-policy shifts.
The spring report frames the outlook around a mix of immediate and longer-term drivers: geopolitical tensions and commodity price volatility that directly affect inflation and consumption, and deeper structural weaknesses that limit the economy's resilience. The council's revised numbers and the accompanying risk scenario underscore the sensitivity of growth and inflation to energy-price developments and global trade dynamics.