The Middle East crisis has led to concerns about a rapid rise in inflation. However, some experts have warned that it could more likely lead to a case of stagflation.
Stagflation means a combination of economic stagnation and soaring inflation.
In a paper released on Monday, the Aviva Investors Investment Strategy team said they reduced their global growth forecast for 2026 from 3.0% to 2.75% since the start of the year, while increasing inflation forecasts to around 3% across the major economies.
Currently, several of the world’s largest Central Banks have held steady – i.e., the US Federal Reserve, the European Central Bank, and the Bank of England, while Canada and Australia’s central banks have raised their nominal interest rates.
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