MUSCAT: A prolonged war in the region could push the global economy into stagflation if the conflict lasts more than a year, Omani economic analyst Hamza bin Hussein al Lawati said in an interview with Oman TV.
Al Lawati said the scale of the economic fallout would depend on how long the conflict lasts, with outcomes ranging from a short-lived inflation shock to a deeper period of weak growth and rising prices.
If the war is contained within four to seven weeks, he said, the world would likely face temporary inflation that could ease once trade, shipping and business activity return to normal. In that scenario, the impact on global economic growth would remain limited, at less than 1 per cent.
But if the conflict lasts between three and seven months, the consequences could become far more severe, with rising food prices, disruption to gas exports and complications in oil shipments likely to trigger broader inflationary pressure across the global economy.
“If the war continues for more than a year, the world will enter stagflation,” Al Lawati said, referring to the damaging combination of high inflation and weak economic growth.
He noted that the global economy was already under strain before the latest escalation, still absorbing the effects of earlier trade disruptions and instability in key maritime corridors, including the Red Sea.
Al Lawati pointed to a sharp drop in vessel traffic through the Strait of Hormuz, one of the world’s most critical energy and trade chokepoints, highlighting the growing pressure on shipping and supply chains.
The wider risk is significant because the Strait of Hormuz is a major route for global oil and gas flows, meaning any prolonged disruption could affect energy markets, transport costs and industrial supply chains worldwide.
For Gulf economies, any extended disruption in regional shipping lanes would carry implications beyond hydrocarbon exports, potentially affecting freight costs, food imports and broader business confidence at a time when many economies in the region are accelerating diversification and investment plans.
Al Lawati said the economic impact would extend beyond energy markets to sectors such as fertilisers, agriculture and manufacturing, all of which rely heavily on stable energy supplies and global trade routes.
He added that repeated geopolitical shocks are accelerating a broader structural shift in the global economy away from the traditional model of globalisation and towards localised industries, stronger regional partnerships and greater economic self-reliance.
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