August 20, 2026/United Capital Report
Economic and Financial Markets: H1 Review & H2 2026 Outlook
Global Economy
1.1 The US-Iran War Changed the Global Economy
The US-Iran war which started on 28 February 2026 altered the global economy prospect in the H1 2026. Inflation rates across major countries which were expected to drop early 2026 maintained upward trend after the War.
This is because of the spike in the global crude oil price following the supply shock that was associated with the war. Crude oil, fertiliser and critical raw materials shortages were caused by the closure of the Strait of Hormuz and destruction of oil infrastructure. Consequently, economic growth rates were revised downward in many regions and inflation rate started upward movement. Central Banks in many regions changed their monetary policy stance from expectation of easing to tightening or at least wait and see.
In major advanced economies, inflationary pressures have proven remarkably stubborn. The USA, UK and the Euro Area all recorded inflation rates that exceeded their respective 2% targets, with the US Consumer Price Index standing at 3.5%, UK at 2.6% and the Euro Area at 2.8% as of the latest readings. The persistence of inflation in these economies reflects the sustained pass-through of elevated energy costs into broader consumer prices. Inflation rate eased in June from the level recorded in May on announcement of Ceasefire.