Iran war pressures German economy and hospitality sector

The conflict in Iran has driven up oil and gas prices, weakening consumer purchasing power in Germany. A Dehoga survey found that 76 % of hotels and restaurants reported reduced spending, with 47 % experiencing cancellations – half of hotels and 38 % of gastronomy venues. Higher fuel, food and logistics costs were cited by 90 % and 86 % of firms, leading to an average revenue decline of 5.1 % year‑on‑year.

The Bundesbank responded by cutting its 2026 growth forecast to a calendar‑adjusted 0.5 % and expects inflation at 2.9 % (falling to 1.9 % by 2028). It projects modest growth of 0.8 % in 2027, with a recovery only picking up in 2028. The bank highlights expansive fiscal spending – especially on defence and infrastructure – as the only factor preventing a recession. Other institutes, such as the Kiel Institute for World Economy, still see 0.8 % growth for 2026 but warn that persistent high energy prices will continue to dampen economic dynamics.