August 2026 GLOBAL GROWTH OUTLOOK
Iran war curbs global expansion Central banks tackle inflation shock
Wachstum 2026 schwächelt weltweit KI-Boom überdeckt strukturelle Eintrübung ▪
Global economic growth is set to drop to three percent this year. The Iran war is delaying the underlying recovery of the global economy, curbing world trade and industrial production and lowering investment activity and consumption expenditure.
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The Iran war is triggering a stagflationary shock. The war is expected to cut global economic growth by just under half a percentage point and bring global inflation up by a good one percent to over 4.5 percent. With the conflict continuing, risks for growth and inflation remain high.
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The US economy should grow by two percent on the back of the AI boom, while China is heading for comparatively low growth of 4.6 percent.
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The Euro area economy is projected to grow 0.8 percent in 2026. Investment and foreign trade remain weak due to volatile energy prices, and growth is below its potential.
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The German economy is on track to expand 0.6 percent this year. The slightly more stable industrial development should help avert a recession. The fiscal stimulus is expected to lift growth by a good one percent next year.
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Most countries have refrained from using their fiscal firepower in the Iran war. This was the right path to choose. Budget deficits and debt ratios are rising tangibly and so are the yield requirements of creditors. Budgetary problems are growing while consolidation remains the exception.
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Central banks still face the difficult task of balancing growth and inflation. The energy price shock has increased global inflationary pressure, encouraging a less accommodative monetary course in the United States, the Euro area and in Japan, while China’s policy remains more expansionary.