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Fitch: Oil Prices Rise and Stock Markets Fall Amid Iran Conflict; Global Real GDP Expected to Decline by Approximately 0.8% After Four Quarters
Recommend 4 Positive 3 Negative 2 |
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Fitch Ratings stated that in the adverse scenario where the Iran conflict continues into the first half of 2026, the impact of rising oil prices and falling stock markets will be the main factors leading to negative effects on the global economy. Cross-industry analysis indicates that global real GDP will decline by approximately 0.8% after four quarters. Fitch's model assessment shows that rising oil prices will have the most severe impact on economic growth in South Korea, Japan, and the US, while falling stock markets will have the strongest impact on Canada, South Korea, and the US. In this scenario, the wealth effect from falling stock prices accounts for about half of the downward impact on US GDP. Growth in some emerging markets will also slow due to the widening spreads of the Emerging Markets Bond Index. Fitch also predicts that in the adverse scenario, the real GDP growth rate for the US this year will be 1.5%, China will be below 4%, and the Eurozone will be below 1%. The model also indicates that the greatest impact of the adverse scenario will occur in the four quarters following the shock, with effects even more severe than those shown by the average annual growth performance. In the adverse scenario, the inflation rate of the "Fitch 20" economies will be 1.3 percentage points higher than the forecast in the "Global Economic Outlook" after four quarters. Inflation rates in India, Poland, and Turkey will all rise by more than 2 percentage points. However, Fitch's estimate of the scenario's inflation impact does not consider any fiscal policy measures that governments might implement (such as limiting energy price increases), which could mitigate the inflationary effects of the scenario. It is believed that monetary policy in the US, EU, or UK will not tighten significantly. (hc/w) Auto-translated by third-party software This translation was auto-generated by third-party software. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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