The escalating conflict between the US, Israel, and Iran has sparked fears of stagflation for the global economy, economists warn. Oil prices surged on Monday, triggering a sell-off across major stock markets, as concerns grow that the war could lead to a global economic shock.
While oil prices fell back on Tuesday after Donald Trump suggested the Middle East conflict could end 'very soon', crude continues to trade at elevated levels. The war has caused an energy supply crisis that risks driving up inflation and interest rates, according to economists, who believe growth is set to weaken while prices rise.
Fears of stagflation – where economic activity stagnates but inflation increases – loom large. The situation threatens to knock growth worldwide and boost prices, amid ongoing global market turbulence.
