Monthly house view | April 2026
Context
The Iran conflict is challenging the base case we presented in our 2026 Outlook for an acceleration of global growth. That case was materialising, but the war has jolted the world economy. Following US and Israeli strikes, Iran closed the Strait of Hormuz waterway and restricted exports of oil, gas, and other commodities.
This has sparked a near-term supply shock for energy and commodities. The resulting higher prices for oil and other products threaten to weigh on growth and push up inflation, putting central banks in a difficult position as they balance the risks to jobs and prices. The outlook is murky, with Iran using the Strait of Hormuz as a chokepoint to hurt the global economy and pressure the US. How the conflict is resolved will therefore be as important as when it is resolved. This includes the extent of damage to energy infrastructure.
AI disruption
In parallel with the Iran conflict is the economic disruption being caused by the rapid development and deployment of artificial intelligence (AI). AI has been a key growth driver—particularly in the US—but there is a risk it turns from gift to curse. Advanced AI tools are disrupting the software sector and sparked a recent sell-off in technology stocks. This situation has also affected the private credit market, which is highly exposed to the software sector. Negative headlines about private credit are expected to persist into the near future due to the structure of some private credit vehicles. While concerns about a liquidity crunch are emerging, it is unlikely that this will become systemic for the overall financial system.
