The German industry association (BDI) said the Iran conflict is hampering global economic growth, prompting the association to lower its global GDP growth forecast. This was stated in the BDI's report on global growth forecast.
According to the report, the association expects global economic growth to slow by almost 0.5 percentage points to 3%. The BDI noted that a deeper recession was avoided thanks to large-scale investments in artificial intelligence (AI). According to the forecast, if it were not for the Iran conflict, the revival of demand and the AI boom could accelerate global GDP growth to approximately 3.3-3.4% (from 3.2% in 2025).
For Germany itself, the BDI forecasts real GDP growth of 0.6%. BDI CEO Tanya Göner added that global risks and uncertainties for business remain high.
If the conflict drags on and shipping through the Strait of Hormuz is further disrupted, the association believes that the global economy will experience an even more significant slowdown. The BDI estimates that global inflation will rise by more than 1 percentage point to exceed 4.5%.
At the same time, the German Industry Association pointed to serious regional imbalances. While the US economy, according to the BDI, will grow by 2%, the European economy will grow by 0.8%. China's growth rate, according to the German Industry Association, will be 4.6%.
The US and Israel started a war with Iran on February 28. In June, Washington and Tehran signed a memorandum of understanding calling for an immediate cessation of hostilities on all fronts, including in Lebanon. However, on the night of July 8, the United States resumed large-scale strikes against Iran, accusing it of violating the terms of agreements reached on the Strait of Hormuz.