Trump’s war is starting to strangle the global economy |
Trump’s war is starting to strangle the global economy
June 1, 2026 — 10:00am
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Even before the full effects of the impact of the war in Iran on energy costs flow through the global economy it is showing signs of the stresses of the global energy shock it precipitated.
In the US, already lukewarm economic growth numbers for the first quarter of the year – containing only the first month of the spike in oil and gas prices – were revised down late last week, while, in April, the inflation number the US Federal Reserve Board regards as its key indicator rose.
In France, inflation hit a two-year high of 2.8 per cent last month even as the economy is contracting. Italy and Spain are also experiencing rising inflation rates, with the European Central Bank expected to raise its policy rate at least once before the end of the year.
In China, manufacturing activity slowed last month and consumer spending, already weak, decelerated to its lowest levels in four years. Industrial output and investment are still falling, according to data released over the weekend.
While oil prices have fallen back from their post-attack highs as the talks about a deal to end the war drag on, the full effect of the war on oil, gasoline and diesel prices have yet to be reflected in the data.
Oil traders are too optimistic about a Trump ‘victory’ in Iran
Stephen BartholomeuszSenior business columnist
Senior business columnist
Even if the war were to end this week, there has been massive depletion of global oil inventories. It will take months to restore stocks to their former levels and, in the meantime, the elevated cost of transport fuels will continue to trickle through supply chains and into end prices and inflation rates.
The average price for gasoline in the US, for instance, is now about 37.5 per cent higher than a year ago, and the average diesel price 55 per cent higher.
Consumer prices in the US and elsewhere were, even before the war,........