The Middle East conflict and ensuing energy shock lasted longer than we assumed in the early days of March. While it has not upended the global economy, it has shifted growth into a lower gear. Higher energy prices and the prospect of renewed central bank tightening are all contributing to a modestly weaker global outlook (Chart 1). Indeed, the ECB has already hiked its policy rate in response to inflation worries and may do so again later this year. They are likely to be joined by and other global central banks, notably Japan and Australia. We now see global growth expanding at around 3% in both 2026 and 2027, ... (full story)