Energy shock threatens growth
The IMF warned that a prolonged increase in energy prices tied to the Middle East conflict could raise global inflation and shave off growth (manilatimes.net). Markets are already reacting — the dollar has rebounded and euro-area forecasts show added uncertainty, even as some banks (like the Royal Bank of Canada) reported firmer Q1 results that suggest pockets of resilience (forexgdp.com) (el-balad.com) (ad-hoc-news.de).
A 10% rise in oil prices sustained for most of a year would add roughly 40 basis points to global headline inflation and trim global output by about 0.1–0.2%, the IMF’s rule‑of‑thumb estimate laid out in its March analysis. (imf.org)) The IMF issued a formal statement monitoring Middle East disruptions on March 3 and Managing Director Kristalina Georgieva reiterated the inflation risk in remarks at a Tokyo symposium on March 9. (imf.org)) Speculators have flipped to a net positive dollar stance, with Commodity Futures Trading Commission data showing about $6.2 billion of long-dollar wagers as of March 17, and Bloomberg reporting the dollar gauge up roughly 2% so far in March. (bloomberg.com)) The ICE U.S. Dollar Index rose to about 99.54 on March 20, a 0.31% gain from the prior session, reflecting safe‑haven flows and higher energy‑linked volatility. (tradingeconomics.com)) ECB staff project futures‑priced oil and gas will peak near USD 90 per barrel and €50 per MWh in Q2 2026 in their March macro projections, and they have revised the short‑term euro‑area outlook down because higher energy costs will damp consumption and investment. (ecb.europa.eu)) The ECB published alternative scenarios in March that explicitly model larger energy‑price shocks and show materially bigger downside risk to near‑term euro‑area GDP under more severe conflict paths. (ecb.europa.eu)) Royal Bank of Canada reported record Q1 FY2026 net income of C$5.8 billion for the quarter ended January 31, 2026, up 13% year‑on‑year, with diluted EPS of C$4.03, a 14% increase. (markets.ft.com)) RBC said stronger results in Wealth Management, Personal and Commercial Banking and Capital Markets drove the gain, partially offset by lower Insurance results in the quarter. (rbc.com))
