Economy: BDI: Iran War dampens growth worldwide

The Iran war is significantly weighing on global economic growth, according to the Federation of German Industries (BDI). The hope for an economic recovery that had emerged at the beginning of the year has been significantly dampened by the conflict, according to a global growth outlook by the BDI. The BDI expects global growth to decline by almost half a percentage point to 3 percent.

High investments in artificial intelligence had prevented an even stronger dampening. Without the war, the recovery in demand and the AI boom would likely have boosted the global economy to growth of 3.3 to 3.4 percent (2025: 3.2 percent).

The industrial association expects minimal growth in Germany. For Germany, the industrial association expects real growth of 0.6 percent after a good second quarter. "The consistent implementation of investment plans and the reform agenda remains a priority in order to strengthen Germany's growth forces," said BDI Managing Director Tanja Gönner, according to a statement.

"Global risks and uncertainties for companies remain high." If the conflict and the disruption of shipping traffic through the Strait of Hormuz continue, a more significant decline in growth can be expected globally.

The global inflation rate will increase by just over a point to over 4.5 percent, according to the BDI. There are large regional differences: While the US is likely to grow by just over 2 percent, Europe will experience a weak phase with 0.8 percent growth. China is expected to grow comparatively weakly at 4.6 percent.