War Fuels Inflation, Global Growth Slows
- By Thetripurapost Desk, Teheran
- May 04, 2026
- 306
Two months after the conflict between the United States and Iran began on February 28, the economic fallout is intensifying globally, with inflation rising and growth projections weakening.
Despite early claims by US President Donald Trump that the war would be short and decisive, the conflict has stalled rather than ended. Over 3,600 Iranians have reportedly been killed, including more than 1,700 civilians.
Inflation spikes globally
According to the International Monetary Fund, global inflation, which was expected to ease from 4.1% to 3.8% this year, is now projected to rise to 4.4% due to sustained high energy prices. The IMF also warned that if the conflict continues, global growth could slow to around 2%, a level often associated with recession.
The global growth forecast has already been revised downward—from 3.3% to 3.1%.
Rising oil and fertilizer prices are worsening inflationary pressures, particularly in agriculture-dependent economies where food expenses account for a large share of household income.
Impact on the United States
In the US, inflation has climbed from 2.4% in February to 3.3% in March. Fuel costs have surged, pushing up prices of air travel and essential services. Companies are increasingly adding fuel surcharges, directly affecting consumers.
Economic strain is also becoming politically significant. A CNN poll shows President Trump’s approval rating dropping to 37% amid concerns over prolonged conflict and rising living costs.
Gulf economies under pressure
The war has disrupted key supply routes, especially the Strait of Hormuz, affecting Iraq, Qatar and Kuwait. The IMF now expects economic contraction in these countries.
The United Arab Emirates has also faced repeated missile and drone attacks, damaging infrastructure and hurting its global reputation as a business hub.
China and Russia gain economically
Meanwhile, China and Russia appear to be benefiting from the crisis.
China, with large energy reserves and long-term investments in alternative energy, remains relatively insulated. Its oil and gas firms are expected to post significant profits this year.
Russia has seen a surge in energy revenues due to higher global oil prices. According to the International Energy Agency, its earnings nearly doubled from $9.75 billion in February to $19 billion in March.
Rising costs of war
Harvard economist Linda Bilmes estimates that the US has spent nearly $1 trillion on the war, though official figures put the cost at around $25 billion.
No clear winners
Experts warn that the economic consequences are widespread. Melanie Sisson of the Brookings Institution said there are “no real winners,” as the conflict continues to disrupt economies from the Middle East to Asia.
Broader regional impact
In Iran, internal conditions are deteriorating, with economic hardship, job losses, and rising poverty compounded by strict government controls.
In Lebanon, ongoing conflict involving Hezbollah and Israel has displaced nearly 600,000 people, further destabilizing the region.
Conclusion
With energy prices surging, supply chains disrupted, and geopolitical tensions unresolved, the conflict is driving a new wave of global inflation. Economists warn that if the situation persists, the world economy could edge closer to recession, with ordinary citizens bearing the brunt of rising costs.