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After a few weeks of calm, the global economy is once again facing two major sources of uncertainty: renewed tensions in the Middle East and the resurgence of U.S. protectionism. These two dynamics are reigniting inflationary pressures, a risk we have always considered to be latent.
Tensions in the Middle East remain a key concern. Although commodity prices seemed to be ignoring geopolitical risks, the escalation of tensions around the Strait of Hormuz has served as a reminder of the vulnerability of the global energy supply. Oil prices, which had fallen unexpectedly, began rising again in recent weeks before stabilizing at the end of the month. These tensions come at a time when several regions had been making encouraging progress on the inflation front. In the United States, the latest figures showed a slowdown in price pressures, driven in part by the earlier decline in energy costs. In the eurozone, households’ inflation expectations have declined, and businesses are not reporting a marked acceleration in wages. In Switzerland, inflation has fallen to 0.5%, its lowest level in several months. The risk now is that geopolitical tensions will disrupt this positive momentum.
At the same time, the United States has announced a new round of tariffs targeting some 60 countries. Presented as a response to certain supply chain concerns, these measures nonetheless mark a new stage in the fragmentation of global trade. While their immediate economic impact remains difficult to gauge, they are contributing to increased uncertainty for businesses and may drive up certain production costs.
Against this backdrop, global economic activity continues to grow at a moderate pace. The United States is still posting higher growth than Europe, although several indicators suggest a gradual slowdown. The eurozone is showing some signs of improvement, particularly in German industry, but the recovery remains fragile. Switzerland, for its part, maintains solid fundamentals, supported by low unemployment and relatively resilient consumer spending.
The key question for the coming months will be whether geopolitical and trade tensions remain contained or whether they ultimately slow global economic activity and push inflation higher. After several years marked by successive crises, the global economy is once again reminding us that energy and trade issues remain at the heart of economic stability.
