world-economy

Middle East Conflict Threatens Global Growth as G-7 Weighs Policy Response

Deteriorating geopolitical risks pose mounting threats to worldwide economic expansion. The ongoing Middle East conflict is creating dual pressures on growth and inflation, OECD Secretary General Mathias Cormann warned at a Group of Seven gathering.

The conflict is exerting downward pressure on economic expansion while simultaneously driving inflation higher, complicating the policy outlook for central banks and governments. Bond market volatility has intensified concerns about the trajectory of global economic prospects, with oil-price dynamics amplifying inflation worries across developed economies.

The G-7 pledged measured fiscal discipline as policymakers navigate heightened uncertainty. Japan's stronger-than-expected early-year growth offered some optimism for the Bank of Japan's rate-hiking pathway, though Middle East tensions continue to cloud the broader outlook for advanced economies.