The war in the Middle East will have global ramifications on the economy. A widening conflict in the Middle East has raised concerns among economists that the global economy could face another energy-driven shock, potentially pushing up inflation and slowing growth. But analysts say the economic consequences will depend largely on one factor: how long the conflict lasts.
Military strikes by the US and Israel on Iran, followed by retaliatory attacks targeting US bases, Israel and Gulf states, have pushed the region into what economists describe as a new period of uncertainty for global markets. The biggest economic risk lies in energy markets. The Middle East remains central to global oil and gas supply, and disruptions to production or shipping routes could push prices higher.
Economists say theclearest way the conflict could affect the global economyis through energy prices. Analysts at Capital Economics said the overall impact will depend largely on how far oil prices rise. “If oil stays near $70 to $80 per barrel, developing market (DM) inflation will be only about 0.2 to 0.3 percentage points above our baseline forecast and the broader economic fallout should remain limited,” the firm said.
[paywall]
Capital Economics added that “if prices climb to $90 to $100, DM inflation could rise up to 0.7 percentage points, and we would probably shave a few tenths from 2026 gross domestic product growth forecasts”. Developed markets, often shortened to “DM,” refers to advanced economies such as the United States, Europe and Japan. The duration of the conflict is emerging as the key variable economists are watching.
[/paywall]
All Zim News – Bringing you the latest news and updates.
