BERLIN, June 3 (Xinhua) -- Rising energy prices driven by the conflict in the Middle East are weighing on Germany's economic recovery, the Organisation for Economic Co-operation and Development (OECD) said on Wednesday, lowering its growth forecasts for Europe's largest economy.
The OECD now expects German gross domestic product to grow by 0.7 percent this year, down 0.1 percentage point from its March projection. In 2027, it sees growth of 1.1 percent, down 0.4 percentage point from its previous forecast.
Germany is no longer at the bottom of the EU growth table, despite the downgrade. "Germany is around the EU average and is the fastest-growing G7 economy within the European Union," OECD expert Isabell Koske said.
Koske said the outlook had weakened due to higher oil and gas prices linked to the Iran conflict, adding that "uncertainty has increased again", which is weighing on private consumption and investment.
The OECD called for structural reforms to strengthen long-term growth, urging Germany to reduce barriers to competition and cut administrative burdens to facilitate market entry and investment, OECD expert Robert Grundke said.
He said regulations and administrative procedures should be simplified and harmonized across levels of government, and recommended lowering the tax and social security burden on labor income, financed through the removal of tax exemptions and preferential treatments. ■