Deutsche Bank economists, including Marc Schattenberg, have highlighted that higher oil and gas prices linked to the Middle East conflict are exerting pressure on the German economy, posing risks to its recovery trajectory [1]. Despite these headwinds, the bank is maintaining its 2026 GDP forecast at 1.0%, citing the positive effects of expansionary fiscal policy and momentum observed in the first quarter of the year [1].
The economists note that the expansionary fiscal policy is expected to act as a buffer, preventing the anticipated recovery from being completely derailed by the energy shock [1]. However, they caution that private consumption is likely to weaken due to purchasing power loss and increased uncertainty, which could dampen the Q2 growth rate from a previously expected 0.2% quarter-on-quarter to near stagnation [1].
In a scenario where the energy shock intensifies, Deutsche Bank projects that the German economy's growth rate could fall to approximately 0.5% in 2026 and 1.0% in 2027 [1]. Additionally, the bank warns that consumer price inflation could average well above 3.0% annually in both 2026 and 2027 if adverse conditions persist [1].
No specific market reactions or analyst opinions beyond Deutsche Bank's projections are mentioned in the article [1].
CONCLUSION
Deutsche Bank sees significant risks to Germany's economic recovery from rising energy prices, though expansionary fiscal policy is expected to provide some support. Growth and inflation forecasts could worsen if energy disruptions persist, highlighting ongoing uncertainty for the German economy.