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The Iran war has introduced significant macroeconomic uncertainty, with elevated geopolitical instability and higher energy prices eroding consumer sentiment and delaying business investment. This has raised stagflation concerns, particularly for energy-importing regions, and contributed to renewed inflation pressures across developed markets (DM). Despite these headwinds, the global economy has proved resilient. Industrial production in DMs has expanded at a 4.5% annualized rate in recent months, even as retail sales growth softened on higher oil prices and weaker sentiment. The war’s impact has been cushioned by reduced oil dependence compared with past shocks, combined with powerful tailwinds from accelerating AI infrastructure spending and fiscal stimulus in major economies. We expect only a minor slowdown in DM GDP growth, moderating from 1.8% last year to 1.6% this year, and rebounding to 1.8% in 2027. The Eurozone faces the greatest pressure given its reliance on energy imports.