KUALA LUMPUR (July 15): Standard Chartered saw bright spots in Asia even as it warned that reignited Middle East conflict will drag on global growth this year.
Global growth will likely come in at 3.0% in 2026 versus its previous forecast of 3.4%, according to the bank also known as StanChart. Asia, particularly Northeast Asia, however has seen robust growth so far this year underpinned by demand for goods related to artificial intelligence (AI), it said.
While inflation has picked up in countries without subsidies and price controls, concerns about weaker economic activity and widespread shortages of energy and industrial materials “have not yet materialised”, StanChart said.
“While we see downside risks to the outlook, growth momentum could also turn out to be stronger than we currently expect,” said Edward Lee, chief economist and head of FX for Asean and South Asia, during a briefing.
The US and Iran have resumed fighting following a brief and fragile ceasefire. Iran closed the critical Strait of Hormuz while the US also announced its own blockade.
Geopolitical conflict in the Middle East is also widening as Yemen and Saudi Arabia exchanged strikes.
StanChart is keeping its growth forecast for China at 4.6%. While China started the year strong, latest data indicates that growth may have dipped below 4.5% in the second quarter.
“Short-term policy measures may be implemented” to support the Chinese government’s full-year target of 4.5-5% and a 25-basis-point cut in the reserve requirement ratio is possible, StanChart said.