Global Economy Feeling the Ripple Effects of the Ongoing Conflict

Global Economic Outlook: March Surveys to Reveal Impact of Middle East Conflict

Key Takeaways

• Initial business surveys from the US to the euro zone, set to be released on Tuesday, are expected to show a decline in purchasing manager indexes (PMIs) for manufacturing and services.
• A synchronized weakening across both sectors is anticipated, providing an initial glimpse of the cumulative economic damage since the US and Israel attacked Iran three weeks ago.
• Central banks have responded to the energy price spike by shelving easing plans, adopting a tightening bias, and increasing interest rates.

Regional Outlooks

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US and Canada

• S&P Global's preliminary March manufacturing and services PMIs will be released on Tuesday.
• The University of Michigan's final March consumer sentiment index will be published on Friday, providing insight into Americans' concerns about surging gas prices.
• Fed officials, including Governor Michael Barr, Vice Chair Philip Jefferson, and regional Fed presidents, will provide commentary on the economic outlook.

Asia

• Inflation data will be a focus, with Japan's consumer price growth expected to moderate in February due to utility subsidies and reduced food price gains.
• Australia's CPI will likely show the trimmed mean gauge remained elevated in February, justifying back-to-back hikes by the Reserve Bank.
• China will report year-to-date industrial profits through February, following a 0.6% gain last year.
• Trade figures are due from the Philippines, Thailand, South Korea, and Hong Kong, and New Zealand will release its March consumer confidence report.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Europe

• Germany will release its closely watched Ifo business expectations gauge on Tuesday, with a slump to a 13-month low anticipated.
• France and Italy will release measures later in the week.
• The Paris-based OECD will release its first combined assessment since the outbreak of war, providing a foretaste of more comprehensive predictions from the International Monetary Fund in mid-April.

Policy Actions

• Sri Lanka's central bank is expected to keep its rate steady at 7.75% on Wednesday.
• Norway, Mexico, and other nations will make central bank decisions in the coming week.