German economy faces uncertainty over war in Iran, top minister warns

The war in Iran is creating fresh uncertainty for the German economy, Economy Minister Katherina Reiche warned on Monday.

Price increases are already visible on the markets, and further developments will depend on how long the conflict lasts and whether important production facilities or transport routes are affected, said Reiche at her ministry's annual regional policy conference in the eastern city of Halle. 

The main cause for concern is the situation in the Strait of Hormuz, she said. A large proportion of global oil and gas supplies are transported via the narrow strait between Iran and Oman.

Rising energy prices could potentially place an additional burden on the economy, said Reiche.

The German government has therefore reactivated its crisis mechanisms, she confirmed. A task force that was active during the gas shortage following the outbreak of the war in Ukraine has been re-established, said Reiche.

It will discuss and monitor the situation several times a day and take appropriate measures if necessary.

However, there are currently no plans to intervene in the market. This "will only be done if it is absolutely unavoidable," said Reiche.

The economic risks are affecting Germany at a time when the economy is already heavily dependent on government investment programmes.

Reiche emphasized: "We can expect price increases now, but not serious consequences."

The minister does not foresee any supply problems for Germany in the short term, with energy supplies having been broadly diversified.