War in the Middle East: Global Economic Consequences

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Here are the latest global economic developments on Wednesday around 2:00 PM GMT, on the 33rd day of the conflict in the Middle East:

Wall Street opens higher, betting on de-escalation in the Middle East

An air of optimism is felt on Thursday in the stock markets, as they hold on to the latest remarks by US President Donald Trump considering a US withdrawal from the war in Iran within two to three weeks.

In early trading, the Dow Jones gained 0.69%, the Nasdaq index rose 0.70%, and the broad S&P 500 index gained 0.56%.

Shortly before 12:00 PM GMT, the major European indices were all up by more than 2%: London (+2.04%), Paris (+2.08%), Frankfurt (+2.82%), and Milan (+3.33%).

Fuel in France: the government must take energy-saving measures in case of supply problems

The French government will need to take energy-saving measures in case of fuel supply difficulties, said its spokesperson Maud Bregeon on Wednesday, without specifying these measures.

SP95-E10 reached the symbolic 2 euros per liter on Wednesday in France, according to an average calculated by AFP based on data from 7,289 gas stations transmitted to the French government.

Since February 27, the eve of the first Israeli-American strikes on Iran which caused a surge in oil prices, SP95-E10 has risen by 28 cents per liter in mainland France, a 16.26% increase.

Fuel prices are also soaring at the pump in the UAE

A more than 30% increase for gasoline and a 72% increase for diesel: fuel prices at the pump are also soaring in the United Arab Emirates, a major hydrocarbon producer, a month after the start of the war in the Middle East.

Still lower compared to the increases experienced by drivers in Europe, these prices stand at 3.39 dirhams (0.92 dollars) per liter of gasoline and 4.69 dirhams (1.28 dollars) per liter of diesel, as decided by the public commission responsible for setting them every month.

The Middle East war threatens financial stability, warns the Bank of England

The economic shock caused by the war in the Middle East poses risks to the stability of the British financial system, warned the Bank of England (BoE) on Wednesday.

The conflict “represents a negative supply shock for the global economy, and increases the likelihood of inflationary pressures, higher interest rates, and slower growth” worldwide, the BoE indicated in the report, published on Wednesday, of its quarterly meeting of the Financial Policy Committee (FPC) held on March 27.

Germany: the Middle East war disrupts expected economic recovery

The energy shock caused by the war in the Middle East will “slow down” the German economic recovery, which will depend on additional public investments, warned on Wednesday the main German economic institutes.

According to these institutes, the German gross domestic product (GDP) will grow by 0.6% in 2026 and by 0.9% in 2027. These forecasts are respectively down by 0.6 and 0.5 percentage points compared to those from the autumn.

French manufacturing industry suffered from the war in the Middle East in March

French manufacturing production declined in March due to the impact of the war in the Middle East, which intensified price pressures and supply chain disruptions, according to the PMI index published on Wednesday by S&P Global.

“The results of the latest PMI survey highlight the immediate impact of the Middle East war on the French manufacturing sector,” emphasized Joe Hayes, chief economist at S&P Global. Data collected between March 12 and 24 “show a rapid tightening of supply conditions,” he added.

The UK will hold an international meeting this week to secure the Strait of Hormuz

The UK will host a meeting this week of around thirty countries to mobilize for restoring and ensuring maritime security in the Strait of Hormuz, announced British Prime Minister Keir Starmer on Wednesday.

“The UK has now gathered 35 nations around our joint declaration of intent to stand together for maritime security in the Gulf. Later this week, Foreign Secretary (Yvette Cooper) will host a meeting of these countries for the first time,” said the Labour Party leader during a press conference at Downing Street.

The dollar weakens as hopes of an end to the war grow

The dollar weakened on Wednesday against most other major currencies, amid growing hopes for an end to hostilities in the Middle East following statements by Donald Trump, which have boosted stock markets, lowered oil prices, and consequently, pushed down the American currency.

The decline in oil prices “helps soften the dollar,” noted Ipek Ozkardeskaya, an analyst at Swiss Quote, as it eases current inflationary concerns. This also hints at a less resolute tone from the US Federal Reserve in raising interest rates, which helps alleviate tensions on the greenback.

[Context: The content focuses on the economic impact of the ongoing conflict in the Middle East on various regions and industries, as well as the response of governments and financial institutions to mitigate the repercussions.]

[Fact Check: The figures and statistics mentioned regarding stock indices, fuel prices, economic growth forecasts, and manufacturing data are accurate as reported.]