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Fitch Ratings estimated the macroeconomic impact of an adverse scenario using the Oxford Economics Global Economic Model, according to its March 26, 2026, analysis. Elevated oil prices and weakening equity markets would serve as the primary drivers of the negative global effect if the Middle East conflict continued. The credit rating agency projected that global real GDP would register approximately 0.8 percent lower after four quarters than in its March Global Economic Outlook base case. Several emerging markets would face slower expansion due to wider spreads on benchmark bond indexes under the outlined conditions.
Higher oil prices would weigh most heavily on economic growth in Korea, Japan and the United States, Fitch Ratings reported. Falling equity prices would exert the strongest drag in Canada, Korea and the United States. Wealth effects stemming from lower share prices would account for roughly half of the overall downward pressure on U.S. GDP in the scenario. The analysis highlighted uneven effects across countries while noting that the shock would prove less severe than the oil crises of the 1970s.
The March Global Economic Outlook had forecast 2026 real GDP growth of 2.2 percent for the United States, 4.3 percent for China, 1.3 percent for the eurozone and 2.6 percent worldwide, according to Fitch Ratings. Under the adverse scenario, U.S. growth would slow to 1.5 percent, Chinese expansion would fall below 4 percent and eurozone output would drop below 1 percent. The agency cautioned that these projections did not incorporate potential fiscal measures governments might deploy to limit energy price rises.
The peak impact would materialize four quarters after the initial shock, Fitch Ratings assessment found. U.S. real GDP growth would register 0.6 percent year on year in the fourth quarter of 2026 compared with 1.8 percent in the base outlook. Eurozone growth would similarly reach only 0.6 percent against 1.5 percent, while global growth would stand at 1.7 percent versus 2.5 percent. The timing underscores how quarterly figures could appear more pronounced than annual averages suggest.
Inflation across the Fitch 20 economies would run 1.3 percentage points higher after four quarters than the baseline projection, the agency stated. India, Poland and Turkiye would each experience increases exceeding 2 percentage points. The estimates excluded any monetary policy responses, with Fitch Ratings anticipating no significant tightening in the United States, European Union or United Kingdom given the differing inflationary backdrop from the 2022 energy surge.
The International Monetary Fund’s April 2026 World Economic Outlook projected global growth at 3.1 percent for 2026 assuming the Middle East conflict remained limited in duration and scope. A subsequent Fitch Ratings Global Economic Outlook in June 2026 revised the agency’s base case down by 0.2 percentage points to 2.4 percent in response to an oil crisis linked to the U.S.-Iran conflict. The World Bank separately forecast a slowdown to 2.5 percent for 2026 as energy price increases weighed on activity, particularly in emerging markets and developing economies.
Oil price volatility has historically complicated economic forecasting, a World Bank study on the hedging role of futures markets noted. The latest scenarios reflect ongoing geopolitical strains that have already prompted widespread forecast adjustments across major institutions. Global growth projections continue to incorporate risks from further escalation or commodity market disruptions.
