As The Economy Withstands The Iran War Germany Raises its GDP Forecast

Stronger exports helped the German government more than double its growth forecast for this year on Thursday. The government said the economy had handled the energy shock from the Iran war and was now benefiting from the global AI boom.

The better outlook could ease pressure on Chancellor Friedrich Merz, who is being criticised for not doing enough to get the economy going again after a long slump.The German economy turned out to be stronger than expected in the spring,” Economy Minister Katherina Reiche said when she presented the new predictions. “Even though there were geopolitical uncertainties, a global energy price shock, the Strait of Hormuz being closed, and tariffs, the economy was able to start to recover,” she told reporters.

Germany’s economy has been stuck for years because of low export demand, high energy costs, US tariffs, and competition from China. However, new signs show that it is beginning to improve. Foreign buyers rushed to stockpile German goods like steel, fertiliser, and metal in the months after the Iran war started, Reiche said. This helped the economy grow.

The government expects exports to rise by 3.7% this year, after falling by 0.9% in 2025.

She also said that the “global trend of investment in artificial intelligence” was good for German providers.

She said that a lot of orders for German-made lasers, semiconductor machines, and cooling systems have come in because of the rise in the number of data centers being built.

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