Global conflicts have cost the world economy almost $850 billion over 2025 and 2026 as businesses are rattled by uncertainty, forcing them to halt spending.
Data from the International Chamber of Commerce showed how uncertainty from conflicts, such as the war in Ukraine or the Middle East, has resulted in lost business opportunities.
It comes as tensions over the Strait of Hormuz sends oil prices soaring while aircraft are restricted from flying huge swaths of global air space.
ICC secretary general John Denton, a former Australian diplomat and business veteran, said this uncertainty significantly weighed on the global economy.
“Last year in 2025, the actual cost in economic activity destroyed was about US$200 billion (AU$284 billion),” Mr Denton told Business Weekend.
“This year in 2026, it’s going to be closer to US$380 billion (AU$540 billion).
“That’s almost US$600 billion (AU$850 billion) worth of economic activity destroyed by the lack of certainty.”
The setback comes as the International Monetary Fund has been forced to soften its outlook for global growth to 3.1 per cent in 2026 and 3.2 per cent next year.
Mr Denton said the IMF is making a “heroic assumption” by forecasting the Strait of Hormuz will reopen in the first quarter of 2027 and growth will pick up to 3.7 per cent next year.
“That’s a heroic assumption, but even then, that’s lagging what we need,” he said.
He noted that trade has continued to rise, but argued the global business community was not in a “robust trading environment” that would facilitate a booming economy.
“It’s the uncertainty and that is actually at a peak level,” Mr Denton said.
“We have not seen this amount of conflict for some time and the conflict is happening in a time when the institutions which could possibly help govern better and enable better solutions to the conflict are not functioning at the level they should.”
Despite the massive expense of global conflict and the uncertainty this brings, Mr Denton noted the cost of war was declining.
He pointed to the cheaper production costs for equipment and various workarounds economies can muster to avoid the fiscal blowback of the restrictions of a conflict.
“If you think about the asynchronous and the asymmetrical way in which war is being fought now, it’s actually being fought by some of the participants at a lower cost,” Mr Denton said.
“The cost for drones is simply lower. The actual cost of militarising choke points is actually not as expensive as people would think.
“So you’re going to see more of that because it’s a lower cost.”