German manufacturing firms expect negative effects due to Iran war

Around 90% of German manufacturing companies expected the Iran war to affect their business severely, according to a survey the Munich-based Ifo Institute announced on Tuesday.

Only 9% of the surveyed firms did not foresee negative consequences from the military conflict.

"The conflict impacts manufacturing directly but above all causes major uncertainty," Klaus Wohlrabe, head of surveys at Ifo, said.

Many companies prepared for additional burdens in the coming months, Wohlrabe added.

Most manufacturing companies, or 78%, pointed to higher energy prices as the primary reason for their concerns.

Another 36% cited restricted shipping routes and supply problems for intermediate products and raw materials.

Some 16% of companies feared disruptions in air freight traffic and around 24% of firms expected declining demand in key export markets.

Many companies also recognized financial risks due to uncertain freight and logistics costs, rising insurance premiums, or increased payment risks.

Wohlrabe stated that the economic consequences of the Iran war already seen and various channels might compound them further.

He concluded that the economic problems for the companies would grow as the uncertainty lasted longer.