Surveys indicate that the Iran conflict could drive up global inflation.
According to a survey conducted by Zhitong Finance, global inflation is expected to rise due to the Iran war, but the overall economic growth outlook remains largely unaffected. The survey shows that half of the respondents believe that the increase in inflation within the eurozone will slightly accelerate, with a roughly similar proportion also expecting an acceleration in U.S. inflation. Nearly 40% of respondents anticipate that China’s inflation rate will also pick up, defined as a rise in consumer prices increasing by 0.3 to 0.9 percentage points more than previously forecast.
The biggest inflationary threat from the war stems from rising oil and natural gas prices, as about one-fifth of the world’s seaborne supply typically passes through the Strait of Hormuz, which is now almost completely blocked. Additionally, if the conflict persists, it could trigger a series of knock-on effects such as higher airfare, increased distribution costs, and broader supply chain risks.
Most respondents predict that the war will have minimal impact on the GDP of the United States, eurozone, or China. However, many added that much depends on the duration of the conflict.
The analysis pointed out that if oil prices continue to rise, major importers including Europe and India will be affected, while exporters such as Russia, Canada, and Norway will benefit. As for the United States, higher fuel costs will squeeze consumer incomes, leading to losses for consumers. However, due to shale oil production making the U.S. an oil exporter, the overall drag on the economy will be relatively small.