German industry warns Iran war drives costs and supply risks
A new survey by the Ifo Institute for Economic Research shows nearly 90% of German manufacturing firms expect the Iran war to impact their operations, with energy price spikes, disrupted supply chains, and weakened export demand among the key concerns. Experts warn prolonged uncertainty could deepen economic strain across Europe’s largest industrial economy.
A wide majority of German manufacturers are preparing for economic headwinds linked to the ongoing Iran war, according to findings released by the Ifo Institute for Economic Research. The survey indicates that almost nine out of ten companies anticipate negative effects on their business, while only a small minority report no immediate concerns.
Energy costs and supply chains under pressure
The report highlights energy prices as the dominant concern, with 78% of firms citing rising costs as a direct consequence of the conflict. In addition, more than a third of respondents point to disruptions in shipping routes, alongside shortages in raw materials and intermediate goods, which are critical to Germany’s export-driven industrial sector.
Logistics and demand risks rising
Companies also expect broader disruptions across transport and trade networks. Around 16% of manufacturers fear air freight operations could be affected, while nearly a quarter foresee a decline in demand from key international markets. These pressures come at a time when global trade remains sensitive to geopolitical instability and fluctuating energy markets.
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Financial uncertainty adds to challenges
Beyond operational concerns, firms are increasingly worried about financial exposure. Rising freight and logistics costs, higher insurance premiums, and payment risks are all contributing to a more uncertain business environment. According to Ifo’s Klaus Wohlrabe, these combined factors are already visible in current conditions and may intensify if the situation persists.
Wohlrabe noted that prolonged instability could amplify economic damage through multiple channels, warning that sustained uncertainty would likely deepen challenges for industrial firms across Germany and, by extension, wider European supply chains. The findings underscore how geopolitical tensions in the Middle East can reverberate through global markets, including in Türkiye, which is closely tied to regional trade routes and energy flows.
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