economy
‘The stakes are enormous’: how a prolonged Iran war could shock the global economy
Donald Trump’s ‘little excursion’ is likely to have long-term effects, from oil prices to inflation to growth, say experts
TL;DR
- Initial market predictions of a short-lived economic impact from the conflict with Iran have been overturned.
- Oil prices have surpassed $100 a barrel, European gas prices have doubled, and financial markets are experiencing high volatility.
- Central banks warn of significant impacts on inflation and global growth.
- The conflict threatens supply chains for essential goods like fertilizer, plastics, and microchip components.
- Comparisons are drawn to past economic crises in 1973, 1979, and 1990 triggered by Middle Eastern energy shocks.
- There is a potential shift towards 'nearshoring' and 'friendshoring' of supply chains due to increased geopolitical risks.
- While the US is largely energy-independent, European countries are expected to be hit hardest.
- The long-term consequence could be a more fragmented global economy with permanent additional costs and higher inflation.