MAS Warns Middle East Conflict May Keep Inflation High, Slow Growth

Central banks and international bodies accept that inflation is likely to ease over the next couple of years but warn that the Middle East war could slow that process. MAS, the IMF and other institutions link higher energy costs and disrupted trade routes to weaker growth, softer hiring and stubborn price pressures. Officials expect that if the conflict drags on, more countries will face slower wage gains and tighter budget conditions.

• •The Monetary Authority of Singapore expects hiring and wage growth in 2026 to slow because of the Middle East conflict.
• •MAS projects that inflation will ease in 2027 but warns that a prolonged war could keep prices elevated and growth weak.
• •The IMF has cut its Middle East growth forecast due to the economic shock from the Iran war.
• •UN officials report that the conflict is choking supply chains and contributing to power outages in Pacific countries.
• •Developed economies warn that market disruption linked to the conflict could last for an extended period.