Atradius: Middle East truce contains stagflation risk

The risk of a more severe stagflation shock has been contained for now, according to Atradius' latest economic outlook released in July 2026. A ceasefire between the United States and Iran has helped ease energy price tensions after months of disruptions to flows through the Strait of Hormuz.

Global GDP growth is projected at 2.4% for 2026, down from 3.0% in 2025, before an expected rebound to 3.1% in 2027. While the conflict has impacted economic activity through higher energy and commodity costs, the central scenario assumes a gradual reopening of the strait, allowing the world economy to avoid a sharper downturn.

Investments in technology, particularly in artificial intelligence (AI), are identified as a key driver supporting global economic growth and cushioning the effects of stagflation. John Lorié, Chief Economist at Atradius, stated that the feared stagflation spiral should be avoided as long as tensions remain broadly managed, with continued investments in AI and data centers bolstering growth.

Global central banks are responding differently to the energy shock. The European Central Bank has raised interest rates to curb inflation, while the U.S. Federal Reserve is maintaining higher rates for longer. China is pursuing a moderately accommodative monetary policy. Global trade is expected to lose momentum, growing by less than 2% in 2026 before recovering to around 3% in 2027.

Atradius warns, however, that risks remain clearly tilted to the downside. A renewed escalation of the conflict between the U.S. and Iran, leading to a prolonged closure of the Strait of Hormuz, could cause energy prices to surge again, pushing global GDP into recessionary levels of 1.9% in 2026 and 1.4% in 2027. The durability of the ceasefire and the speed of maritime traffic normalization are crucial factors for the global economic outlook.