Global South growth alarm
Analysts warn wars are delivering a dual hit to global growth and prices — inflationary pressure plus weaker expansion — creating acute stress for emerging markets ( ). Multiple briefs now say the Global South is at risk of fiscal collapse amid the deepening US‑Israel‑Iran conflict — a geopolitical shock that’s reverberating through commodity and capital markets (x.com).
S&P Global purchasing‑manager indexes for March showed broad weakness — composite PMIs fell in the US and euro zone while India’s factory activity slid to its weakest since 2021, signalling synchronized demand losses tied to the conflict’s shock to supply chains. (bloomberg.com) The International Monetary Fund put a rule‑of‑thumb on the hit: a 10% sustained rise in oil prices would add about 40 basis points to global headline inflation and trim world output by roughly 0.1–0.2 percentage points. (imf.org) The IMF also reported commercial shipping through the Strait of Hormuz has fallen by about 90% since the conflict escalated, curtailing crude and LPG flows that feed fertilizer supply chains. (imf.org) Analysts warn the shipping shock is already pushing food and fertilizer prices higher and could concentrate pain in parts of sub‑Saharan Africa and other import‑dependent low‑income countries. (cnbc.com) Global fixed‑income markets have registered heavy losses: global bonds lost roughly $2.5 trillion in March amid stagflation fears after oil‑price moves, while emerging‑market currencies and equities slumped, triggering central‑bank FX intervention in countries such as Indonesia and India. (bloomberg.com) (advisorperspectives.com) Credit‑risk agencies and economists say sovereign stress is rising: Fitch warned the conflict adds fresh credit pressures for emerging‑market sovereigns, and former IMF chief economist Gita Gopinath said many governments enter any prolonged war with “depleted” fiscal space. (fitchratings.com) (bloomberg.com) Multilateral institutions are flagging downside scenarios and mobilising support: the WTO said persistently high oil and gas prices could shave about 0.3 percentage points off 2026 global GDP growth, the Asian Development Bank warned a protracted shock could raise inflation in developing Asia and the Pacific by up to 3.2 percentage points and cut growth by as much as 1.3 points, and the World Bank and IMF have issued statements signalling readiness to provide financial and technical assistance. (cfr.org) (adb.org) (worldbank.org) (imf.org)
