标签： Oceania

The International Monetary Fund (IMF) has once again downgraded its 2026 global economic growth projection, citing heightened geopolitical uncertainty and rising risks spurred by the resumption of hostilities in the Middle East. In its latest World Economic Outlook update released Wednesday, the fund cut the 2026 global growth forecast to 3.0 percent, down 0.1 percentage points from its April prediction. This marks the second downward adjustment to global growth expectations this year, and represents a gradual cooling of economic expansion from 2025 levels.

Crucially, the revised projections were finalized before recent cross-border military exchanges between the United States and Iran reignited open conflict in the region. Petya Koeva Brooks, deputy director of the IMF’s research department, emphasized that the rapid escalation of tensions overnight underscores the profound uncertainty hanging over the global economic outlook. “We’re going to be monitoring developments very closely,” she told reporters, speaking shortly after former U.S. President Donald Trump announced an end to the temporary U.S.-Iran ceasefire and warned of imminent heavy strikes on Iranian targets.

Inflation projections have also been revised upward, with the IMF now forecasting global inflation will hit 4.7 percent in 2026, higher than earlier estimates. While Koeva Brooks projected that any disruptions from the conflict would normalize gradually over a nine-month period, she warned that sustained shocks pushing up oil prices and unanchoring inflation expectations could cause further damage to global economic activity.

Despite the downgrade, the downward revision remains modest, as booming growth in the artificial intelligence sector has partially offset the economic drag from the Middle East war. The IMF projects global growth will rebound to 3.4 percent in 2027, a recovery Deniz Igan, division chief at the IMF’s research department, describes as a “V-shaped recovery”. Delayed post-conflict normalization, prolonged supply chain disruptions and elevated energy costs are the core factors dragging down 2026 global growth, Igan told Agence France-Presse.

The economic fallout from the conflict varies dramatically across different national economies, the fund notes. Energy-exporting countries outside the active conflict zone benefit from improved terms of trade driven by higher oil prices, while economies integrated into the AI-led technology expansion have recorded stronger activity even if they rely on energy imports. By contrast, energy-importing economies with limited participation in global technology value chains have seen a pronounced slowdown in economic activity.

The current conflict traces back to February 28, when U.S.-Israeli strikes on Iran prompted Tehran to retaliate by effectively blocking traffic through the Strait of Hormuz, the world’s most critical chokepoint for global oil shipments. The closure sent global oil prices soaring, putting immediate pressure on major economies around the world. A temporary U.S-Iran truce later reopened the waterway and resumed oil and gas flows, but hostilities have now reignited.

While the global economy has weathered the conflict’s initial shocks better than many analysts initially feared, the IMF warns the aggregate global outlook masks stark divergence across regions and countries. For example, retail gasoline prices rose 30 percent in emerging Asia after the conflict began, compared to just a 15 percent increase in Latin America. The U.S. economy is still projected to grow 2.3 percent in 2026, but growth for the Middle East and Central Asia region has been cut by 1.2 percentage points to just 0.7 percent. The euro area also saw a downward revision, with 2026 growth now pegged at 0.9 percent; France’s growth forecast was cut 0.3 percentage points to 0.6 percent.

China, the world’s second-largest economy, saw a small upward adjustment to its 2026 growth projection, which now stands at 4.6 percent. Even so, the IMF warns the full economic impact of the renewed conflict has not yet filtered through to global data. The release of strategic petroleum reserves has temporarily eased energy market pressures, but weakening growth remains a distinct possibility going forward. The conflict could also accelerate global trade fragmentation, pushing up prices for key goods across the board.

There are some bright spots amid the gloom, however. Major economies central to global technology supply chains have posted stronger-than-expected performance, even amid their exposure to conflict-related disruptions. The world’s four largest net exporters of AI-related hardware — Taiwan, South Korea, Thailand and Malaysia — have all recorded resilient growth this year. Igan added that the upward revision to 2026 inflation forecasts only represents a temporary pause in the global disinflation trend, rather than a permanent reversal.

Renewed geopolitical upheaval in the Middle East sent shockwaves through global financial markets on Wednesday, after U.S. President Donald Trump announced that a temporary ceasefire with Iran had ended, reigniting investor fears over disrupted energy supplies. The resurgence of tensions traces back to recent Iranian attacks on commercial vessels transiting the Strait of Hormuz, the world’s most critical chokepoint for global oil shipping, which prompted the U.S. to launch new extensive strikes against Iranian targets this week. Washington also moved to revoke a temporary sanctions waiver that had allowed limited exports of Iranian crude, further tightening global energy supplies.

Speaking to reporters on the sidelines of a NATO summit held in Turkey, Trump confirmed the ceasefire was “over” while stopping short of ruling out future diplomatic negotiations. The announcement immediately upended market sentiment that had stabilized in recent days, when oil prices had drifted back down to pre-conflict levels following a period of earlier volatility.

By mid-trading on Wednesday, global energy prices had posted sharp double-digit percentage jumps from their previous closes. The international benchmark Brent North Sea crude climbed more than 5% to peak near $78 per barrel, while U.S. West Texas Intermediate crude also gained 4.6% to settle around $73.65 a barrel. Both benchmarks pulled back slightly in afternoon trading, but still held onto most of their daily gains by the 1350 GMT reporting cutoff.

The spike in geopolitical risk triggered a broad sell-off across equities markets worldwide. On Wall Street, the Dow Jones Industrial Average fell 1.0% to 52,412.15 in early midday trading, while the broad S&P 500 dropped 0.5% and the tech-heavy Nasdaq Composite declined 0.3%. “Trump triggered a sell-off,” noted Sam Stovall, chief market analyst at CFRA Research, summarizing the immediate market reaction.

European markets saw even steeper losses: 90 minutes before closing, France’s CAC 40 and Germany’s DAX were both down 1.8%, while London’s FTSE 100 had shed 1.2%. Asian equities closed the trading day deep in negative territory as well, compounded by existing investor concerns over overinflated valuations and excessive capital spending in the AI technology sector. South Korea’s Kospi, which has been the leading benchmark for the regional AI-driven tech rally, plummeted 5.4% to close at 7,246.79 — falling more than 20% below its record high set just one month prior. Tech giants Samsung and SK hynix both dropped around 6% on Wednesday, extending steep losses from the previous session even after Samsung projected a roughly 19-fold year-on-year jump in second-quarter operating profit fueled by strong AI chip demand.

“Investors have been spooked in recent weeks by fears of excessive spending in the AI world and rich valuations in parts of the tech space, causing widespread profit-taking,” explained Dan Coatsworth, head of markets at British investment firm AJ Bell.

Market analysts warn that the return of open conflict in the Middle East could have long-lasting spillover effects for the global economy. “Geopolitical risks are rising for markets,” said Kathleen Brooks, research director at global trading group XTB. Fawad Razaqzada, a senior market analyst at Forex.com, framed the renewed tensions as an unwelcome development for market participants heading into the summer holiday period. “After a long and eventful first half of the year dominated by the US-Israel war on Iran and Trump’s constant flip-flopping, the last thing investors, and frankly anyone else, needed was a return of the same geopolitical environment,” he said. “Unfortunately, it looks like we could be heading back to that.”

Brooks added that a further escalation that blocks the Strait of Hormuz would send prices even higher: “For the Brent crude oil price to extend gains above $80 per barrel, we would need to see another US naval blockade of the Strait of Hormuz, which would stop Iran from selling its oil and cause a major escalation in tensions.”

The U.S. dollar posted modest gains against most major global currencies on Wednesday, as investors priced in the risk that sustained higher oil prices will keep global inflation elevated longer than previously projected. That outcome would put additional pressure on the U.S. Federal Reserve to implement further interest rate hikes to cool price growth, which typically supports dollar valuations. By 1350 GMT, the dollar rose to 162.49 Japanese yen from 162.09 yen the previous day, while the euro fell to $1.1399 from $1.1415 against the greenback.

Australia’s already critical national housing shortage has deepened after new official data revealed a sharp collapse in new residential construction activity during the first three months of 2024, with industry leaders warning that recent federal budget policy changes will only worsen the sector’s headwinds and delay progress on the country’s ambitious homebuilding targets.

Fresh data published by the Australian Bureau of Statistics (ABS) this week shows that the pace of new home building stalled dramatically in the March quarter, months before the Albanese government unveiled its controversial tax changes for property investors in the May 2024 federal budget. Total new dwelling commencements dropped 11.2% over the quarter to just 48,012 new homes. The sharpest decline was recorded in high-density residential projects, where starts plummeted 19.8% to 19,116 units, while detached single-family home starts fell a more modest 3.5% to 27,658 properties.

While total completed housing projects remain 0.8% higher year-on-year despite the weak first quarter, the latest downturn has pushed Australia even further off track to meet its national Housing Accord target of building 1.2 million new dwellings between 2024 and 2029. To hit this goal, official projections require Australia to average 60,000 new housing starts per quarter — a benchmark the current construction activity is now falling well short of.

Industry economists say the current slowdown has been driven by a perfect storm of interconnected headwinds hitting the construction sector. Master Builders Australia chief economist Shane Garrett explained that rising borrowing costs, global supply chain disruptions linked to the ongoing conflict in the Middle East, soaring building material prices, and persistent skilled labor shortages have combined to drag down home building activity across the country. “Construction demand across housing, non-residential building and civil infrastructure projects have all been squeezed by higher interest rates,” Garrett noted.

The sector now faces additional uncertainty following the tax policy changes introduced in Treasurer Jim Chalmers’ latest federal budget, which was framed as a response to worsening housing affordability stress and rising economic inequality. The budget restructured two key property tax rules to shift investor capital away from existing home sales and toward new construction: it restricted negative gearing tax benefits exclusively to newly built properties, and replaced the longstanding 50% flat discount on capital gains tax (CGT) with an inflation-adjusted indexation system that includes a 30% minimum tax rate.

Master Builders Australia chief executive Denita Wawn warned that the sudden policy shifts have created widespread uncertainty across the industry that will further dampen investment and slow new project development. “The ABS figures show building activity remains below the level needed, and at the same time, builders are telling us that uncertainty created by the federal budget is affecting confidence and slowing investment decisions,” Wawn said.

“This uncertainty means some builders will think twice before proceeding with new projects. In some cases, projects may be delayed, scaled back or not proceed at all. Australia cannot afford policies that make it harder to attract investment into construction when we need to deliver more homes, transport infrastructure, schools, hospitals as well as energy and Olympic projects over the next decade,” she added.