Globally, based on the data available up to October 2026, the 2026 energy shock has had a less pronounced impact on activity and inflation than that of 2022. The deterioration in business climate surveys following the outbreak of the conflict in Iran was, overall, less severe, and an improvement followed fairly quickly, driven by the positive impact of the AI boom. Household confidence has been more affected by the rise in energy prices, without benefiting from the cushioning effect of the AI boom. On the emerging markets side, while non-resident portfolio investment flows have been highly volatile since the start of the conflict in Iran, financing conditions have held up well and continue to withstand both the energy shock and the pressures on advanced economies' sovereign rates
The overall picture from the confidence surveys available for October is one of contained erosion. According to the PMIs, the business climate in the services sector showed a significant decline (seen as a technical backlash from September’s strong print) and a slight decrease in the manufacturing sector. The two indices remain well above the 50 threshold, indicating expansion. Household confidence also deteriorated, quite significantly, affected by the rise in inflation, concerns about unemployment and purchasing power.
The US macroeconomic performance has seemingly been unaffected by the energy shock. GDP growth came in at 3.4% AR in Q3 2026 (up 0.8pp), its highest print since Q3 2025. This result was underpinned by buoyant private domestic demand. Consumer spending held at 3.8% AR, despite higher inflation and still-gloomy household sentiment. Business investment jumped 12.7M AR, the fastest since Q3 2020, on the back of the AI capex cycle.
The average CPI inflation rate of the fifteen leading emerging economies rose again year-on-year in September (4.6% compared with 4.3% in August); a similar acceleration had already been observed in the Spring. However, the inflationary impact of the conflict remains lower than in 2022. Manufacturers’ views on trends in the prices of inputs and finished goods have returned to their pre-conflict levels. However, agricultural and food prices have been rising more rapidly in recent months against a backdrop of increasingly frequent and destructive extreme weather events.
Oil and gas markets remained tilted to the upside in October due to the increased risk of re-escalation in the Gulf conflict. Added to this geopolitical risk premium is a regional component for gas: the beginning of the winter season with historically low inventories in Europe. The price variations for oil and gas are currently greater than those recorded during the 2022 crisis, but in terms of levels, gas prices remain well below 2022 levels.
