Commerzbank’s Dr. Ralph Solveen reports that German industry orders increased by 5% in March, with core orders rising 5.1% and gains broadly distributed across sectors, signaling that an economic recovery was underway prior to the outbreak of the Middle East conflict involving Iran [1]. The report highlights that, unlike previous months, large-scale orders were not the main driver of this growth, suggesting a more robust and widespread improvement in industrial demand [1].
However, the onset of war in Iran has led to a sharp rise in energy prices and heightened uncertainty, which has significantly dampened business sentiment in Germany [1]. Dr. Solveen notes that as long as the conflict persists and the Strait of Hormuz remains closed, demand for German industrial goods is expected to weaken, with order figures likely to deteriorate in the coming months [1].
Commerzbank now anticipates that the German economy could experience a slight contraction in the second quarter of 2026, following the growth observed around the turn of the year 2025/26 [1]. The bank’s analysis underscores the vulnerability of Germany’s recovery to external shocks, particularly those affecting energy markets and global trade routes [1].
CONCLUSION
Commerzbank’s analysis indicates that Germany’s industrial recovery is at risk due to the Middle East conflict and resulting energy price shocks. The outlook for German industry has turned more cautious, with the possibility of a slight GDP contraction in Q2 2026 if current conditions persist.