Economic outlook
Global supply chains, a miracle of modern technology and organisation, have spearheaded globalisation and allowed the world to grow at an increasingly faster pace since 1995 . However, they have been under consistent and increasing stress for nearly a decade now. From global trade wars to a series of high-profile military conflicts, global trade has faced consistent and serious disruption on many fronts.
The 2025 trade war, in particular, was expected to increase stress in global trade. The anticipated impact didn’t materialise, however. Trade volumes remained fairly stable and supply chains continued to operate efficiently. The closure of the Strait of Hormuz, on the other hand, dramatically changed that particular calculus. The New York Fed’s Global Supply Pressure index reached near-record levels since 1998.
Supply chain pressures are more pronounced in Asia, which is facing bigger shortages as a result of the closure of the Strait of Hormuz. They are lower in Europe, despite the continent’s dependence on energy imports.
Our House View is that despite tensions, the broad economic backdrop remains supportive enough for corporations to continue to outperform in terms of earnings and profit margins. Supply chains are under pressure, to be sure, but they are still delivering. However, continuation of the closure of the Strait of Hormuz beyond 2-3 months since it began could worsen the consequences for 2026 and spill over into 2027, moving the needle towards more adverse economic scenarios.
- George Lagarias, Chief Economist, Forivs Mazars in the UK