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Middle East War Triggers Global Economic Slowdown, Central Banks Warn

Economic activity across multiple regions is deteriorating as the Middle East war disrupts supply chains and drives inflation higher, according to central bank surveys and business sentiment indicators.

France's economy is showing signs of weakness, with companies reporting reduced growth prospects amid elevated cost pressures. Similar headwinds are affecting economies from Asia to Latin America, though some bright spots remain.

China's services sector expanded unexpectedly in April despite price shocks from the Middle East war. Firms absorbed higher costs rather than passing them to consumers. Chile posted its first monthly economic gain of the year. However, central bankers cautioned that the Middle East war poses growing risks to both growth and inflation across the region.

Inflation pressures are intensifying globally. The Philippines is experiencing faster-than-expected price increases, prompting discussion of more aggressive monetary policy responses. Uncertainty surrounding the conflict's duration is adding to economic headwinds.