Global Economy Begins to Falter Due to Iran War, Here Are the Indicators
REPUBLIKA.CO.ID, WASHINGTON – The Iran war is beginning to impact major world economies. A business survey on Tuesday (24/3/2026) showed a surge in energy prices and rising uncertainty curbing economic activity and pushing inflation expectations higher.
Preliminary findings from a questionnaire sent to purchasing managers at companies in the United States, Europe, and Japan provide a comprehensive picture of the economic impact from the conflict that has lasted nearly four weeks and disrupted much of the global energy supply.
The surge in prices of oil, gas, and other energy products is a double blow to the global economy, as it not only boosts inflation but also hampers growth.
Cited from the Reuters website, in addition to being a challenge for economic leaders, including US President Donald Trump, this situation is also prompting many central banks to consider tighter monetary policies to curb price pressures.
Among the 21 countries using the euro currency, private sector growth has nearly stalled this month. Companies indicated increased delivery times and expectations of cost increases that could potentially be passed on to consumers.
S&P Global reported that the eurozone’s composite Purchasing Managers’ Index (PMI) fell to its lowest level in 10 months at 50.5 in March, down from 51.9 in February. A figure above 50 still indicates expansion in the private sector.
Input and output price indicators in the eurozone’s manufacturing sector showed a significant surge. Nationally, business confidence in France fell sharply, while private sector growth in Germany slowed to its lowest level in three months.
Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, described the eurozone situation as “ringing alarm bells for stagflation”, a combination of economic stagnation with rising prices.
In the United States, the S&P Global survey showed a similar pattern. Rising energy prices are increasing inflation concerns amid weakening business sentiment that indicates weaker prospects for private sector employment.
The US Composite Output PMI fell to 51.4 this month, the lowest level since last April, after previously standing at 51.9 in February. The decline has occurred for two consecutive months, particularly in the services sector.
The economies of other Group of Seven (G7) countries also showed weakness. In the UK, business activity grew at the slowest pace in six months, while manufacturing input costs rose at the fastest rate since 1992.
In Japan, the flash composite PMI fell to 52.5 in March from 53.9 in February, reflecting the slowest growth in three months.
Outside the G7, India, which imports about 90 per cent of its crude oil and nearly half of its gas needs, recorded its lowest private sector growth in three years in March. Input cost increases were the fastest since June 2022 and partly passed on to consumers, amid pressure on corporate profit margins.