Stocks Tumble as Trump and Iran Ramp Up Rhetoric

The recent escalation of tensions between the US and Iran has led to a decline in stock prices, with analysts predicting a negative impact on the global economy. In the short term, the World Trade Organization (WTO) expects global GDP growth to be trimmed by 0.3 percentage points if oil and gas prices remain elevated for the rest of the year. Goldman Sachs predicts GDP contractions of approximately 14% for Kuwait and Qatar, and 3-5% for Saudi Arabia and the UAE, if the conflict persists through the end of April. In the long term, the International Monetary Fund (IMF) projects global GDP growth to be 0.2-0.4 percentage points lower over 2027-2030, driven by slower energy-intensity improvements and higher capital costs in the Gulf. Oxford Economics expects energy-intensive industries to see a 2-4% lower output in 2027, with overall global GDP down 0.15% in 2027 relative to a no-war scenario.

Analyst Predictions

Analysts from various institutions, including the WTO, Goldman Sachs, Deutsche Bank, and the Brookings Institution, have weighed in on the potential impact of the Trump-Iran escalation on the global economy. Their predictions are summarized in the table below.

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