The German economy embarked on the road to recovery at the end of 2025, initiated by the increasingly expansionary fiscal policy. This recovery is likely to continue this year and next, although the strong rise in crude oil and natural gas prices following the start of the Iran war will put a damper on it. In order to take appropriate account of the high level of uncertainty about how energy prices will move, this forecast considers two scenarios for how the German and international economy might develop moving forward. While the de-escalation scenario assumes a quick end to the conflict and only temporary increases in crude oil and natural gas prices, the escalation scenario assumes a much longer conflict with a sharper and more persistent rise in energy prices. […]