The economic slowdown driven by the Middle East conflict looks manageable

Each month Oxford Economics’ team of 450 economists and analysts updates our baseline forecast for 200+ countries using our innovative Global Economic Model. Fully linking individual country models through global assumptions about trade volume and prices, competitiveness, capital flows, interest and exchange rates, and commodity prices, our model provides a rigorous and consistent structure for forecasting and understanding the impact of economic shocks.

Below is just the top-level summary of our analysis of the latest economic developments.

• The duration of disruption to shipping traffic in the Strait of Hormuz is the critical known unknown for the global economic outlook, along with how quickly energy production can recover.
•  If traffic picks up gradually, in line with our baseline assumption, then recessions around the globe would be unlikely. However, the Middle East conflict is expected to push world GDP growth down to 2.4% this year, below the tight 2.8%-3% range of the past few years.
• Recent data suggest that the world economy grew at a solid pace in Q1. 

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