Goldman Sachs shares an update on the war in Iran and believes that the major risk to global supply and inflation is mostly confined to energy, which limits the risk that the large second-round inflation effects observed in 2021-2022 will re-emerge.
Global Economics Comment: Supply Shocks from the War in Iran Are Mostly Limited to Energy
Goldman Sachs
Joseph Briggs, Megan Peters
Research
12 Pages
Key Takeaways
Non-Energy Trade: Non-energy trade with Gulf economies is limited, accounting for only 1% of global trade, with major DMs and EMs generally even less exposed.
Chemicals & Metals: Gulf exporters account for a large share of global production for some chemical and metal products, it appears less likely that trade disruptions for these products will create severe bottlenecks that limit broader production. Current spot price increases for the most highly exposed chemicals and metals suggest only 0.1pp incremental upside to global headline inflation.
Shipping: The problematic shipping disruptions from 2021-2022 appear less likely to repeat. Gulf economies are not major re-exporters of most products (aside from boats), non-tanker ocean shipping costs have actually ticked down since the start of the war, and the recent rise in airfreight prices (while notable) implies less than 5bp upside to global inflation.
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