The massive economic impact of the global energy crisis
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Illustration: Aïda Amer/Axios
Even if the Iran war ended now and the Strait of Hormuz reopened, the crisis has lasted long enough to bring a meaningful and damaging toll worldwide.
Why it matters: "What began as a disruption in a key energy corridor is now feeding through the entire global economy," the UN's trade and development arm said in an analysis.
Driving the news: Fresh outlooks are landing that take stock of the war's effect.
- The UN expects global economic growth to slow from 2.9% in 2025 to 2.6% this year, and that's without further escalation.
- It's not just about energy. Goods needed for fertilizers and much more transit the region — only right now, they don't.
Threat level: Developing nations are hardest hit, though Europe is also reliant in the Strait, and the U.S. is tethered to global oil markets.
- With higher prices and messed-up supply chains, the UN sees the growth in global merchandise trade slowing from 4.7% last year to 1.5%-2.5% in 2026.
"As uncertainty rises, investors are shifting away from riskier assets, selling stocks, bonds and currencies in developing countries," it finds.
- Borrowing costs have already risen in Africa, Latin America and the Caribbean, developing Asian nations, the UK and elsewhere.
Zoom out: "In some regions, the effects are already acute. Southeast Asia faces fuel shortages and rationing that threaten industrial activity," Atlantic Council analysts said in a weekend post.
Zoom in: The International Energy Agency has started publishing a country-by-country look at emergency measures.
- A small snapshot: Bangladesh is rationing fuel, limiting air-conditioning levels (something multiple other nations are doing) and closing universities.
- India is capping industrial gas use; the Philippines declared a national energy emergency; Korea is asking car owners to avoid driving one day per week.
- Meanwhile, many nations are cutting fuel taxes and boosting subsidies, which can strain budgets.
What's next: More U.S. and global data points.
- The Labor Department will release U.S. inflation data for March on Friday — the first Consumer Price Index that will capture some of the war's effect.
- The Energy Department drops revised oil and fuel price outlooks tomorrow.
- International Monetary Fund head Kristalina Georgieva will give a speech Thursday on the global economic outlook, with the fund publishing detailed analyses the following week.
