War Revives Stagflation Dangers for Global Economy
The global economy is at risk of stagflation due to the ongoing war in the Middle East, with business surveys expected to show deterioration in growth and inflation. The International Monetary Fund has warned of potential outcomes including a near-recession for the world.
The cumulative global impact of seven weeks of war in the Middle East will emerge in business surveys from multiple countries. The initial take for April in economies from Australia to the US will be published, with indexes in Germany, France, and the UK expected to show broad deterioration. The numbers may point to the degree that stagflation is lurking, a term evoking the mix of surging prices and stalling growth of the 1970s. The International Monetary Fund warned of potential outcomes including a near-recession for the world. Even if the war ends, the damage to growth and inflation can't be easily undone. Policymakers remain cautious about how to respond, with the European Central Bank and Federal Reserve closely watching survey data.
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