BERLIN, March 31 (Reuters) - Germany's leading economic institutes have more than halved their 2026 economic growth forecast, slashing it to 0.6% from the 1.3% projected in September, as rising energy costs linked to the Iran war fuel inflation, sources familiar with the report told Reuters on Tuesday.
German business daily Handelsblatt also reported the 0.6% forecast.
The institutes also lowered their 2027 growth outlook to 0.9% from a prior estimate of 1.4%, according to the sources.
The reduced projections reflect the economic fallout from the Iran conflict, the sources added.
The institutes now expect inflation to rise by 2.8% both this year and the coming year, the sources said. Until now, the economists had forecast 2.0% and 2.3% for 2026 and 2027, respectively.
The updated forecasts, set to be officially presented in Berlin on Wednesday, are a key input for the government's economic planning, including tax revenue projections.
The report is a joint effort by five prominent economic institutes: RWI in Essen, the Ifo institute in Munich, IfW in Kiel, IWH in Halle and DIW in Berlin.
Final adjustments to the figures remain possible before publication. The government's revised outlook, informed by these forecasts, is being closely monitored as Berlin grapples with economic challenges for the year ahead.
(Reporting by Rene Wagner, Holger Hansen and Klaus LauerWriting by Kirsti KnolleEditing by Miranda Murray)