Analysts warn economic damage from Hormuz war is already 'baked in' despite reopening
By
Anniek Bao
Baker's choice. Dense with flavour, light on filler.
Summary
The reopening of the Strait of Hormuz, following a U.S.-Iran memorandum, has eased the most acute threat to global energy supplies. However, analysts warn that the economic damage from nearly four months of war—including disrupted supply chains, higher inflation, and weakened growth outlook—has already been 'baked in' and will take months to unwind. Even with normalized shipping, the inflationary effects are expected to persist across many economies.
Key quotes
· 3 pulledEarly signs that the Strait of Hormuz is reopening have eased the most acute threat to global energy supplies, but economic damages from the nearly four months of war will take months to unwind, analysts warned.
The U.S. and Iran signed a memorandum Thursday to open the Strait of Hormuz, ending a war that has upended global energy supply chains, pushed inflation higher and dented the outlook for growth.
But even if shipping through the strait normalizes, higher inflation has already been largely 'baked in' across many economies, Simon MacAdam, deputy chief global economist at Capital Economics.
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