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The analysts' predictions for the German economy have been significantly altered by events related to warfare between Israel and Iran.
Experts in five institutions agreed that Germany's GDP will only grow by 0.2 percent in 2027 compared to a previous projection of 2.5 percent.
Germany's first quarter GDP increased in line with previous expectations. However, most experts think that this boom is unlikely to continue into 2022 due to increased levels of unemployment and reduced consumer spending.
As a consequence, the average annual level of inflation in the European Union increased by 2.5 percent last month, an increase from 1.9 percent, with this increase driven by high energy prices as a direct consequence of the conflict in the Middle East.
It is reported that despite this energy shock negatively impacting the German economy, it will positively help Germany recover from an earlier economic recession due to this market factor.
While the coronavirus crisis "will dampen this recovery in Germany, it should not completely stop German economic recovery," he says, citing increased government spending plans for defense and infrastructure projects as key stabilizing factors.
Last year, Germany's gross domestic product grew by only 0.2 percent, representing three consecutive years of declining GDP.
Wollmershäuser argued against "short-term activism" by government officials regarding a mandated reduction of gasoline prices, stating that such actions "will require significant taxpayer costs, will benefit many individuals and families who do not need assistance, cause distortions to the pricing mechanism causing additional demand for crude oil through lack of price signals, and inhibit future demand for crude oil."
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Germany has responded relatively cautiously so far. For example, earlier this week legislation was enacted that allows petrol retailers to only increase the price of petrol once each day, at noon, in an effort to curtail the substantial fluctuation in petrol prices that consumers have experienced.
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The legislation has increased the authority of the French government to use its anti-cartel enforcement abilities against gasoline prices deemed excessive.
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Other countries in Europe have already taken more aggressive measures than Germany, while at the same time the EU Executive Commission has urged member states "to consider implementation of demand-side savings measures" and "not to implement measures that would increase demand for the use of petroleum."