Key facts
- Global economy's capacity to absorb shocks is narrowing.
- Inflation in Europe, Britain, and the US is expected to remain between 3.5% and 4% until at least mid-next year.
- Oil inventories are at very low levels.
- There is no sign that the straits affected by the conflict can be reopened.
The global economy is facing a period of reduced resilience, with its capacity to absorb further shocks diminishing. The energy shock stemming from the American and Israeli attacks on Iran in February, which caused significant disruption to global energy flows, has been weathered by many economies. However, elevated energy prices persist, and a growing number of risks are emerging.
According to Neil Shearing, group chief economist at Capital Economics, current conditions are characterized by very low inventory levels and no indication that affected shipping straits will reopen. He projects that inflation in Europe, Britain, and the United States will likely stay within the 3.5% to 4% range until at least the middle of next year. The New York Times noted that while the feared crash never materialized despite the disruptions, the "wiggle room is narrowing at the same time the outlook is darkening."