Oxford Economics (OE) identified the sustainability of the US-Iran peace agreement as the pivotal factor for the global economy in the second half, according to a report released on 6일 (local time). The institution stated that whether the peace agreement continues will determine if other risk factors amplify or ease. OE cited Middle East conflict, artificial intelligence (AI) supply chain disruptions, and trade policy uncertainty as major risks facing the global economy, emphasizing that the peace agreement's fate will decide whether the world benefits from deflation through reduced energy demand or endures a second oil price shock.
Oxford Economics Identifies Three Major Global Economic Risks
OE assessed the Middle East conflict, AI supply chain disruptions, and trade policy uncertainty as the primary risk factors confronting the global economy. The institution explained that the peace agreement's continuation will determine whether these risks amplify or ease. Regarding AI supply chains, OE evaluated them as persistent risk factors that could materialize through various channels beyond semiconductor shortages.
US Section 301 Tariffs to Increase from End of July
OE stated that trade policy uncertainty will cause tariff rates to rise slightly from the end of July due to US Section 301 tariffs. The institution analyzed that effective tariff rates could fluctuate at any time because the US Treasury holds the authority to adjust tariff rates without conducting new investigations. OE projected that trade policy headwinds will continue regardless of the Middle East crisis when the USMCA review cycle and EU-China trade conflicts are added to the equation.
Interconnected Risk Factors Could Trigger Rapid Cascading Effects
OE characterized the risk factors as interconnected and non-linear. The institution projected that if the peace agreement collapses, oil prices would surge, pressure on Asia's AI supply chains would increase, central banks would implement hawkish monetary policies, financial conditions could deteriorate, and the outcomes of US midterm elections and Israeli general elections could be affected. OE emphasized that the ripple effects would unfold very rapidly.
FAQ
Why does Oxford Economics consider the US-Iran peace agreement the key factor for the second half global economy?
Oxford Economics stated in its report released on 6일 (local time) that the peace agreement's sustainability will determine whether other risk factors amplify or ease. The institution explained that the agreement's fate will decide whether the world experiences deflation through reduced energy demand or faces a second oil price shock.
What are the three major risk factors identified by Oxford Economics?
Oxford Economics identified Middle East conflict, AI supply chain disruptions, and trade policy uncertainty as the primary risks facing the global economy. The institution assessed AI supply chains as persistent risk factors that could materialize through various channels beyond semiconductor shortages.
How will US trade policy affect tariff rates according to Oxford Economics?
Oxford Economics stated that US Section 301 tariffs will cause tariff rates to rise slightly from the end of July. The institution analyzed that effective tariff rates could fluctuate at any time because the US Treasury holds the authority to adjust tariff rates without conducting new investigations, and that trade policy headwinds will continue when the USMCA review cycle and EU-China trade conflicts are factored in.
