Comprehensive Introduction 1- Surveys: Iran war has begun to affect the global economy

- Polls released on Tuesday indicated that a war with Iran is already having a negative impact on major economies around the world, showing how a sharp rise in energy prices and increased uncertainty are slowing economic activity and raising inflation expectations.

The preliminary results of surveys sent to purchasing managers at companies in the United States, Europe and Japan represent the most comprehensive picture yet of the economic impact of the conflict that has been ongoing for nearly four weeks and has brought much of the global energy supply to a standstill indefinitely.

The subsequent rise in oil, gas and other related product prices would be a potential double whammy for economies around the world, leading to wider inflation and hindering growth.

Aside from the problems facing the leaders of those economies, including US President Donald Trump himself, this has already prompted many of the world's central banks to consider adopting a tighter monetary policy to curb price pressures.

Among the 21 economies that use the euro, private sector growth has almost ground to a halt this month, as companies cited longer delivery times and expectations of higher costs which they will try to pass on by raising prices.

Standard & Poor's Global said the preliminary composite Purchasing Managers' Index (PMI) for the Eurozone fell to a 10-month low of 50.5 in March, below expectations, from 51.9 in February. A reading above 50 indicates growth in the private sector.

Input and output price indices for the Eurozone manufacturing sector showed sharper movements. On a country-by-country basis, business confidence fell significantly in France, while German private sector growth slowed to its lowest level in three months.

Chris Williamson, chief economist in market intelligence at Standard & Poor's Global, said the eurozone figures "sound alarm bells about stagflation," referring to the risk of a combination of recession and rising prices.

A Standard & Poor's Global survey in the United States painted a similar picture of the world's largest economy, where rising energy prices have sparked concerns about inflation amid declining business confidence, suggesting a weakening outlook for private-sector employment.

Other G7 economies fared little better. In Britain, the Standard & Poor's Global survey showed business activity growing at its slowest pace in six months, while manufacturers' input costs accelerated at the fastest rate since 1992.

In Japan, the preliminary composite Purchasing Managers' Index, which combines manufacturing and services activities, fell to 52.5 in March from 53.9 in February, the slowest rise in three months.

Outside the G7, India, which imports about 90 percent of its crude oil and about half of its natural gas from abroad, saw private sector growth fall to its lowest level in three years in March, with input costs rising at the fastest pace since June 2022, the burden of which was passed on to companies that also saw their profit margins decline.

So far, only a few economists are talking about the war pushing the global economy into an outright recession, even as the energy shock from the de facto closure of the Strait of Hormuz, through which about a fifth of the world’s oil passes, worsens.

“The scenario depends heavily on the duration of the conflict and on expectations regarding energy prices,” said Nicola Nobel of Oxford Economics, commenting on the impact on the Eurozone.

However, there is a growing realization that the economic consequences will not be short-lived, given the damage to energy infrastructure in the Gulf region caused by Iranian attacks in response to US and Israeli missile attacks.

The OECD's research center said last week that it was too early to determine the extent of the conflict's impact on global growth, but noted a "significant level of downside risk" for the global economy.