The conflict in the Middle East has dealt a heavy blow to the global economy. A fragile ceasefire and the stop-start nature of US-Iran negotiations have weighed heavily on market sentiment. Recently, the World Bank (WB) cut its forecast for global economic growth to the lowest level since the COVID-19 pandemic.

Escalating tensions between the US, Israel, and Iran have raised concerns about rising inflationary pressures and potential negative impacts on global economic growth. Should tensions and instability persist, supply shocks caused by disruptions to supply chains could emerge, casting a shadow over economic prospects.

The global trade landscape is witnessing significant upheaval as protectionism has continued to spread. However, new trends are also gradually emerging and becoming increasingly clear, most notably the increased negotiation and signing of free trade agreements (FTAs) by various countries, creating a “shield” to protect their economies.

Public debt, the technology market bubble, and protectionism are casting a shadow over the agenda of the annual meeting of the International Monetary Fund (IMF) and the World Bank (WB), which are currently taking place in Washington, the US.

The International Monetary Fund (IMF) warned that geopolitical tensions and the consequence of the global economy fragmenting will increase risks to financial stability. The instability of the global economy, the inefficient performance of major economies, high inflation and a sharp drop in investment, are also factors that restrain the growth momentum of many regions.

In the past weekend, member of the Board of Governors of the Federal Reserve (FED) Christopher Waller warned that the FED may have to raise interest rates higher than expected if related issues cannot be cooled down. It shows that the world's No.1 economy is still facing difficulties and this move will cause many consequences for the global economy.