The global outlook is being reshaped by a persistent energy shock, at best delaying the expected 2026 demand recovery and at worst pushing the global economy into recession. Risks in this shock are tilted toward weaker volume growth rather than a wage-price spiral, though the US faces a greater risk of persistence of inflation, even though the economy is among the least exposed to high energy prices.
Key Highlights
- Higher energy and commodity costs will compress real incomes and corporate margins, while weakening labor markets limit wage pass-through, despite structural labor shortages and push adjustment toward employment rather than prices.
- At the same time, constrained central bank policy and generally rising term premia are tightening financial conditions, reducing the effectiveness of bonds as hedges and exposing growing stress in private credit, making capital preservation more complex and reliant on diversification. In FX, currencies are currently driven by energy dynamics, but the dollar’s safe-haven status is eroding structurally, while the euro and yen will appreciate if energy prices ease.
Report Scope
- This report analyzes the impact of the US-Iran conflict on the global economy.
- It includes economic forecasts and central bank outlooks for all major economies.
- The analyst's expert analysts provide analysis of the conflict's impact on key industries, including agribusiness, automotive, construction, energy, financial services, and retail.
Reasons to Buy
- Another year, another global macro shock. Each shock is different, leading to differentiated short-term effects. At the same time, these shocks are starting to leave a trace on financial markets, with serious implications for corporate treasurers.
- This report will help you understand the implications of the latest macro shock on your business and provide vital strategic analysis to help you navigate the challenging market landscape.
Table of Contents
- Executive Summary
- Global Economic Outlook
- Sector Analysis
- Appendices
