"A sustained crisis would extend far beyond energy markets, hitting transport costs, manufacturing supply chains and consumer spending worldwide. Analysts caution that even partial or temporary closures of key routes could trigger sharp economic spillovers."
"The current backdrop is especially sensitive, with many major economies still grappling with higher interest rates and subdued growth. A sustained spike in energy costs could complicate efforts to bring inflation back to target levels."
A crisis in the Middle East threatens to significantly impact the global economy, potentially reducing it by $1 trillion. Analysts warn that instability in key shipping lanes, particularly the Strait of Hormuz, could lead to sustained increases in oil and gas prices, exacerbating inflation and slowing growth. The International Monetary Fund has indicated that energy shocks can have widespread effects, especially amid already high inflation and limited central bank responses. Prolonged high prices may erode demand, complicating recovery efforts.
Read at London Business News | Londonlovesbusiness.com
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