They remain the main drag on the local market drastically high energy prices, fueled by the ongoing military conflict between the United States and Israel with Iran.
Read also: Will the USA guarantee protection for Zbigniew Ziobro? This is his situation after his escape
The war paralyzes industry and hits wallets
The so-called analysts the advice of economic sages bluntly points out the devastating consequences of high prices on the raw materials market. High electricity and fuel bills effectively drain citizens' savings, leading to a sharp decline in private consumption.
The situation in the production sector is equally dramatic. The rising costs of maintaining factories hit the already shrinking German industry and effectively discourage business from making new investments. This is complemented by the weakening economic situation on global markets, which is dragging down exports – the current driving force of the local economy.
In turn, forecasts for the coming years give only a shadow of hope.
According to experts, for 2027 five-person so-called the council of economic wise men forecasts GDP growth of 0.8%, driven by billions of state spending on infrastructure modernization.
Inflation is breaking records, experts want cuts
Returning is also a problem dearness. It is estimated that average inflation in Germany will amount to 3% this year and will drop to 2.8% next year. Meanwhile, the latest data from the Federal Statistical Office show that in April, this indicator soared to 2.9%, which is the worst result since January 2024.
Read also: Minister Miłosz Motyka announced new fuel prices. There is a change
To save public finances, the council of advisers proposed radical and socially unpopular reforms to the government. The idea is to stop the increase in health and care insurance premiums.
Economists recommend, among others: including state officials in the general health system and drastically tightening the criteria for granting care services, which in practice would cut off thousands of people in need from government money.
The coalition is preparing reforms in the shadow of the naval blockade
Germany's ruling coalition of the Christian Democrats (CDU/CSU) and the Social Democrats (SPD) is trying to respond by planning a powerful package of laws. The changes are to cover the long-term care system, pensions and income tax (including relief for people with low and medium earnings). For now, however, there is a lack of specifics and sources of financing for these promises, which already heralds huge political frictions in Berlin.
The situation is publicized by organizations associating entrepreneurs. Business representatives have long been warning that, in addition to enormous social burdens, German competitiveness is hampered by sky-high energy prices, excessive bureaucracy and official procedures that drag on for months.
Additionally, after the outbreak of war in the Middle East, the strategic Strait of Hormuz was blocked. Before the conflict, over 25% of the goods were transported here. world crude oil and about 20 percent liquefied natural gas (LNG).
The effects of this blockade are deplorable. Research by the Ifo Institute shows that The effects of military escalation are currently felt by nearly 90 percent. German industrial companies, and every third is struggling with supply paralysis. The data for the first quarter clearly confirm that the German economic engine has almost completely stopped.
