New Delhi, March 17: A new report has warned that the ongoing Middle East conflict and the closure of the Strait of Hormuz since early March 2026 have sharply increased stagflation risks for the global economy. The report highlights that Asia and Europe are particularly vulnerable due to their heavy dependence on imported energy.
The disruption has moved beyond market sentiment to actual supply constraints, creating real energy shortages. Rising oil prices are expected to fuel inflation while slowing global growth, raising the threat of stagflation. Economies in Asia, including India, China, and Japan, face heightened exposure, while Europe continues to struggle with energy diversification following the Ukraine war.
According to the report, prolonged disruption could weaken consumer demand, raise production costs, and destabilize financial markets. Policymakers in Asia and Europe may face difficult trade-offs between controlling inflation and supporting growth, as the global economy braces for renewed volatility.
