The war in Iran is significantly weighing on global economic growth and has dashed hopes of a stronger recovery this year, Germany's leading industry association said on Friday.
The Federation of German Industries (BDI) expects global economic growth to slow by almost half a percentage point to 3% in 2026, according to its latest global growth outlook.
High levels of investment in artificial intelligence (AI) have prevented an even sharper slowdown, the BDI said.
Without the war, recovering demand and the AI boom would probably have pushed global growth to between 3.3% and 3.4%, up from 3.2% in 2025.
The BDI warned that global growth could slow even more sharply if the conflict and the disruption to shipping through the Strait of Hormuz persist.
The outlook varies considerably between regions.
The BDI expects the US economy to grow by just over 2%, while Europe is forecast to go through a period of weakness, expanding by 0.8%.
China's economy is expected to grow by 4.6%, a comparatively weak pace for the world's second-largest economy.
For Germany, the biggest economy in Europe, the BDI expects inflation-adjusted economic growth of 0.6% this year following a strong second quarter.