The Weekly Briefing from Capital Economics

Our updated macro and market forecasts assess the impact on growth and inflation – and the likely central bank response – under both baseline and adverse scenarios for the Middle East conflict. In the latest episode of The Weekly Briefing from Capital Economics, Group Chief Economist Neil Shearing discusses why the more benign scenario would deliver a negative but manageable shock to the global economy, while a more adverse outcome could tip it into outright recession.
Also on the show, Deputy Chief UK Economist Ruth Gregory explains why gilts have been the hardest hit among G10 government bonds as tensions have escalated. She explores the sharp shift in expectations for Bank of England policy and the underlying fiscal vulnerabilities fuelling market anxiety – including the risk of a change in government leadership.
Read our latest Global Economic Outlook: https://www.capitaleconomics.com/publications/global-economic-outlook/forecasting-through-fog-war-1

Pity the poor central banker. As energy prices surge, they are grappling with the trade-off between growth and inflation, while trying to communicate this all to markets without triggering an unwanted tightening in financial conditions.

At the end of an unusually busy week for policy meetings, Group Chief Economist Neil Shearing and Chief Global Economist Jennifer McKeown assess how central banks are managing this difficult task, and whether investors are right to position for rate hikes from some banks that only a few weeks ago were expected to ease policy this year.
In the latest episode of The Weekly Briefing, they talk to David Wilder about issues including:
How inflation risks in the global economy are crystallising as the conflict approaches its fourth week
What separates central banks, from the Bank of England and ECB to the BOJ, RBA and the Fed, in how they are likely to respond
Whether interest rate cuts would come back onto the table if the fighting were to end
Join our 26th March online briefings about our new macro and market forecasts: https://www.capitaleconomics.com/events/drop-global-economic-and-market-outlook-pricing-energy-shock

News of a record release of emergency oil reserves has quickly been overshadowed by images of tankers on fire in the Strait of Hormuz. Thirteen days into the conflict, tensions in the Middle East appear to be escalating rather than easing. What is the view from commodity and financial markets, and what could this mean for the global economy?
Capital Economics has modelled three scenarios to assess how oil and gas supplies and prices could evolve as the conflict unfolds, and what this might mean for global growth, inflation, central bank policy and financial markets.

In this special episode of The Weekly Briefing:
Chief Climate & Commodities Economist David Oxley discusses how our scenarios map out potential paths for oil and gas supply and prices, depending on the duration of the conflict and the extent of damage to production and infrastructure.
Group Chief Economist Neil Shearing explains how these scenarios could translate into different growth and inflation outcomes globally, and what they might mean for central bank policy — including what to expect from the upcoming meetings of the Fed, Bank of England, ECB and Bank of Japan.
Deputy Chief Markets Economist Jonas Goltermann explores how financial markets could respond, how far prices might rebound in the event of a ceasefire, and which trades may never fully recover.
Explore all our coverage of the conflict, including our scenarios here: https://www.capitaleconomics.com/key-issues/iran-conflict
Interested in trial access? Email us at [email protected]

Conflict in the Middle East, a surge in oil and gas prices, and a surprise drop in US payrolls – it’s been a turbulent week for the global economy.
In the latest episode of The Weekly Briefing, Capital Economics Group Chief Economist Neil Shearing joins David Wilder to discuss what the spreading Middle East conflict and sharp spike in energy prices mean for global growth and inflation, and why the latest US jobs report may not signal a major slowdown.
Later, Senior Climate and Commodities Economist Kieran Tompkins explains the scale of disruption in global oil and gas markets, whether alternative supply can offset the shock and what the longer-term implications could be for energy markets.
Read all our key insight into the Middle East conflict here:
https://www.capitaleconomics.com/key-issues/iran-conflict
Get in touch for a trial to our platform:
[email protected]

Amid widening conflict in the Middle East, our economist team held an online briefing first thing Monday to tackle some of the key questions that clients have been asking. In this edited clip from that briefing, you’ll hear the team tackle issues, including:
The extent of disruption to traffic through the Strait of Hormuz and the implications for oil and gas prices;
The point at which rising oil prices would force central banks to slow or abandon policy easing;
The dollar as a safe haven currency in this time of geopolitical upheaval;
How this conflict could shape the economic outlook for the GCC economies;
The likelihood that a change of leadership in Tehran could open the way for a deal with the US.
With: Jennifer McKeown (Chief Global Economist), William Jackson (Chief EM Economist), David Oxley (Chief Climate & Commodities Economist), Jonas Goltermann (Deputy Chief Markets Economist). 
Note: This client briefing was held at 1000 GMT/1800 SGT on Monday, 2nd March
See our dedicated Iran conflict page below for more key analysis, and contact us at [email protected] to find out about access. 
https://www.capitaleconomics.com/key-issues/iran-conflict