"The figures show the severe impact the Iran war is already having on the euro zone economy. But, like in the 1970s, stagflation could become a widespread global phenomenon characterised by high inflation, low growth, and high unemployment, heavily driven by oil price shocks."
"Oil and gas prices are feeding directly into production costs, transport, and ultimately consumer prices. At the same time, demand is weakening. This combination is toxic. Growth is fading just as inflation is being reignited."
"Energy markets have tightened rapidly since the escalation of tensions involving Iran, with crude prices pushing higher and shipping disruptions adding further strain. Europe and Asia remain particularly exposed due to its reliance on imported energy, leaving businesses vulnerable to sustained price volatility."
Households, businesses, and investors should brace for a potential global stagflation similar to the 1970s. The euro zone's private sector output has dropped to a 10-month low, influenced by the Iran conflict. High inflation, low growth, and rising unemployment are expected as oil prices surge. Recent data shows a significant slowdown in euro zone business activity, with cost pressures increasing. Central banks face limited options to respond effectively, and energy markets are tightening, particularly affecting Europe and Asia due to their reliance on imported energy.
Read at London Business News | Londonlovesbusiness.com
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