The global economy is navigating turbulent waters. Competing forces affecting economic growth are intersecting in a complex and uncertain environment. Global growth has been supported by rising investments related to artificial intelligence and fiscal policy across major economies. At the same time, geopolitical and trade tensions are a headwind and a major source of risks. The adverse effects on the global economy from the war in the Middle East primarily stem from the sharp increase in energy prices. Together with tighter financial conditions and heightened uncertainty, the war is having a negative impact on global growth, while posing upside risks to inflation. Other geopolitical tensions, in particular Russia’s unjustified war against Ukraine, remain a major source of uncertainty. Protectionist policies are also weighing on global trade and fuelling uncertainty, while triggering a reconfiguration of global trade flows. Additional frictions in international trade could disrupt supply chains, reduce exports and weaken consumption and investment. A predictable and open international economic order remains essential t ECB'S LAGARDE SAYS THAT UNCERTAINTY ABOUT EURO AREA INFLATION HAS GROWN A LOT AFTER THE MIDDLE EAST WAR STARTED. ECB'S LAGARDE SAYS UPSIDE RISKS TO OUTLOOK INCREASE, PARTICULARLY IN THE SHORT TERM. ECB's Lagarde: Inflation could turn out higher than the baseline, in particular if inflation expectations and wage growth were to rise in response more than expected ECB's Lagarde: Determined to ensure inflation stabilizes at 2%