HomeFinance NewsEconomyRed Sea Tensions Ignite Inflationary Storm: Global Economy Braces for Impact

Red Sea Tensions Ignite Inflationary Storm: Global Economy Braces for Impact


Red Sea tensions risk significantly higher inflation, OECD warns


Higher shipping costs due to tensions in the Red Sea could potentially worsen inflation in OECD member countries.

The 100% surge in shipping rates may raise import price inflation by nearly 5 percentage points, adding 0.4 percentage points to overall price increases.

This is a risk, but not the base case for the OECD.

The longer Cape of Good Hope route adds 30-50% to journey times, reducing global capacity.

However, excess capacity from new ships may moderate cost pressures.

While European imports face challenges and delays, networks have adjusted to the new situation.

Positive data in recent months shows inflation easing among OECD members, indicating a potential recovery of real incomes and consumption.

However, Europe faces challenges due to energy price shocks, rising inflation, and tighter monetary policies.

The OECD forecasts stronger growth and declining inflation in the U.S. and anticipates a potential interest rate cut by the European Central Bank later this year.

  • Overall sentiment: neutral
  • Positive

    “The OECD’s Lombardelli said that overall there has been positive data among its members in recent months showing inflation coming down consistently.”

    “The OECD’s latest outlook hiked its economic growth forecast for the U.S. by 0.6 percentage points from its previous November estimate, to 2.1% for this year.”


    “Elevated shipping costs as a result of ongoing tensions in the Red Sea could impede the global fight against inflation, the Organisation for Economic Co-operation and Development said Monday.”

    “Based on Higher shipping costs due to the Red Sea crisis could add 5 percentage points to OECD member import costs, the Paris-based group said Monday.”

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