Iran war starts to hit global economy, business surveys show

The ongoing war in Iran is starting to impact economies globally, as reported by business surveys on Tuesday. These surveys reveal that rising energy prices and growing uncertainty are slowing down economic activities and increasing inflation expectations. The early results from surveys sent to purchasing managers in the United States, Europe, and Japan provide a clear picture of how the nearly month-long conflict is affecting the economy by disrupting a significant portion of the world’s energy supplies. The sharp rise in prices for oil, gas, and related products poses a serious threat to economies worldwide, contributing to overall inflation and hindering growth. This situation could cause problems for economic leaders, including U.S. President Donald Trump, and has led many central banks around the globe to consider stricter policies to control price increases. In the 21 countries using the euro currency, growth in the private sector nearly came to a halt this month. Companies reported longer delivery times and anticipated rising costs, which they plan to pass on to consumers. According to S&P Global, the flash euro zone composite Purchasing Managers’ Index dropped to a 10-month low of 50.5 in March, down from 51.9 in February. A score above 50 indicates growth in the private sector. Both input and output prices in the euro area manufacturing sector showed significant changes. Business confidence fell sharply among French companies, while growth in the German private sector slowed to a three-month low. Chris Williamson, chief business economist at S&P Global Market Intelligence, noted that the numbers from the euro area suggest a risk of stagflation, a troubling mix of stagnation and rising prices. Similarly, S&P Global’s survey of the U.S. economy showed that increased energy prices are raising fears of inflation, alongside weakened business confidence that could lead to fewer job opportunities in the private sector.