The global economic impact of conflict in the Middle East will hinge on its effect on energy markets. If oil stays near $70-$80 per barrel, DM inflation will be only about 0.2-0.3 percentage points above our baseline forecast and the broader economic fallout should remain limited. But if prices climb to $90-$100, DM inflation could rise up to 0.7 percentage points and we would probably shave a few tenths from 2026 GDP growth forecasts. The US is far less exposed than Europe or Asia.
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