The Strait of Hormuz blockage is the defining economic shock of 2026, severing a critical energy corridor and driving oil prices sharply higher. Global growth has been revised down as rising energy costs erode household purchasing power and compress corporate margins. Energy-importing economies face the steepest impact, while net exporters and markets with diversified supply sources, strong domestic demand or effective subsidy mechanisms are better positioned to absorb the shock.
Delivery
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Key findings
Strait of Hormuz disruption triggers global growth downgrade
The Strait of Hormuz blockage has severed a critical energy corridor, sending oil prices sharply higher and disrupting Gulf trade flows. Euromonitor International has cut its 2026 GDP growth forecast by 0.2 percentage points to 2.9% (compared to January 2026), as surging energy costs suppress business activity and erode purchasing power across advanced and developing economies.
Returning inflation narrows central bank options
Global inflation is now forecast at 4.6% for 2026, up 1.1 percentage points on the January 2026 forecast, as higher oil prices cascade through transport, manufacturing and food costs. The pass-through is sharpest in developing economies, where weaker currencies and limited fiscal capacity amplify the shock. Renewed price pressure constrains central banks from cutting rates, leaving fewer tools available to support slowing growth.
Domestic demand and energy mix shape who weathers the shock
Economies reliant on imported energy and external demand, notably the UK and Eurozone, face the steepest downgrade as rising costs and weakening trade weigh on output. By contrast, economies with diversified energy sources and strong domestic consumption, such as the US, are better placed to absorb the shock. Scenario outcomes hinge on whether the disruption eases or persists.
Disruption cascades across trade and supply chains
The crisis extends well beyond energy. Rerouted shipping, airspace restrictions and disrupted petrochemical and fertiliser exports are raising freight and input costs globally. These compounding pressures are squeezing margins and exposing vulnerabilities in trade-dependent economies.
Prolonged supply disruption keeps oil prices elevated and growth under pressure
Key findings
Key events shaping economic growth over April 2025-April 2026
Hormuz disruption impact on business
Global growth softens under the weight of higher energy costs
Inflation reignites as energy costs cascade through markets
Disrupted Hormuz routes squeeze oil, gas and trade flows
Duration and intensity of Iran war are key factors determining global growth
Inflation uncertainty adds to the cost pressure on energy-exposed businesses
US: Slowing but resilient growth amid trade and commodity price uncertainty
US: Energy and housing keep inflation above target despite tariff relief
US: Structural resilience buffers the economy against oil price shocks
Eurozone: Energy shock stalls fragile recovery
Eurozone: Imported energy costs reignite price pressures
Eurozone: Total energy dependence amplifies all downside scenarios
UK: Energy costs and trade risks cloud outlook
UK inflation faces renewed upside risks from energy dependence
UK growth hinges on geopolitical energy outcomes
Japan: Economy slows as energy shocks and trade pressures test resilience
Japan’s inflation outlook reflects deep energy vulnerability and rising risks
Japan severely impacted under rapid and prolonged Gulf crisis
China growth moderates as cautious policy manages risks in 2026
China inflation remains low amid energy risks and fragile domestic demand
China's export engine may stall as trade headwinds and global slowdown converge
India: Domestic demand momentum sustains expansion despite global headwinds
India: Oil import dependency transmits Hormuz shock into food and transport costs
India: Extreme energy vulnerability magnifies external shocks
ASEAN: Regional growth diverges as energy exposure and trade shape trajectories
ASEAN: Inflation strains deepen across ASEAN as geopolitics reshape price dynamics
ASEAN: Energy shock scenarios expose six asymmetric growth vulnerabilities clearly
Brazil: Growth moderates as external tailwinds meet domestic constraints
Brazil: Tight policy anchors disinflation but energy and food costs pose upside risks
Brazil: Net exporter status provides buffer but commodity swings create volatility
Mexico: Nearshoring momentum stalls as tariff uncertainty weighs
Mexico: Hormuz price oil shock muted by government fuel tax mechanism
Mexico: USMCA review and mixed energy exposure create binary outcomes
Questions we are asking
How to build resilience amid geopolitical tensions
Real GDP annual growth forecasts and revisions from last quarter
Inflation forecasts and revisions from last quarter
Central bank interest rates forecasts and revisions from the last quarter
Baseline and alternative scenarios: Q2 2026
Alternative scenarios (cont.): Q2 2026
Global Economic Forecasts: A structured view of the macro outlook and key risks
Data types used in Global Economic Forecasts
AI usage in Euromonitor reports
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