First corona, then war German economy in longest crisis for decades
Economic researchers believe the German economy is in the midst of the longest crisis in decades. First corona, then the Ukraine war and now the Iran war are shaking Europe's largest economy.
17.04.2026, 11:24
17.04.2026, 11:39
SDA
"For years, we have been sleepwalking from one economic shock to the next, with glimmers of hope disappearing in the meantime," Michael Grömling from the German Economic Institute (IW) told the news agency (DPA) on Friday after presenting an economic survey of 1,000 companies. The tabloid newspaper "Bild" had previously reported on this.
The crisis began in 2020 with the coronavirus pandemic and its massive consequences for companies. When that was over, the economic forecasts for 2022 were positive, Grömling continued. But then the next shock came with the war in Ukraine and high energy prices. This is now repeating itself: the positive forecasts for 2026 are now being wiped out by the Iran war.
Deep worry lines among company managers
The IW's economic survey of around 1,000 companies from the industrial, service and construction sectors is sobering. For example, 43% of companies reported that their business was worse than a year ago. Only 14 percent reported better business.
Pessimism prevails - for the rest of the year, significantly more companies expect business to be worse than better. The survey was conducted in March, i.e. after the start of the Iran war.
The fact that 40 percent of companies intend to reduce their investments also gives cause for concern. The survey also revealed that many companies are cutting back on personnel: In industry, 37 percent of the companies surveyed are planning to employ fewer staff and only 14 percent more. For service providers, the ratio is less clear at 28% to 22%.
Crisis led to far-reaching reforms
"The succession of massive economic shocks in recent years is unique," says economic expert Grömling. The last time there was a similarly long crisis was between 2000 and 2005, which began with the crash in share prices (dotcom bubble) and the doubling of the oil price to around 30 dollars per barrel.
At that time, China's economy was gaining momentum and needed much more oil than before, causing prices on the world markets to rise. In 2001, the terrorist attacks of September 11 put a further damper on the economy.
The weak economy and rising unemployment were overcome by the then social democratic government through structural reforms. "Today, as then, we need to make the labour market more flexible so that more people can get a job," says Grömling.
In addition, bureaucratic costs need to be reduced: German companies employ a lot of people who are only responsible for complying with costly government regulations, and expensive legal advice is also necessary. Such expenses are ballast for a company's productivity. "The bureaucratic burden is high, so profits fall and prices for customers rise - that's bad for Germany's competitiveness."
