Iran War and Inflation: An Escalating Economic Crisis The global economic matrix is facing new pressures amidst the uncertainty of the Iran War. Geopolitical conflicts, particularly volatility in energy markets, are having a complex impact on economies worldwide. According to the Peterson Institute for International Economics (PIIE)'s 2026 global economic outlook analysis, while the world economy continues to expand, driven by the artificial intelligence (AI) boom, growth is expected to slow due to geopolitical uncertainties, including the Iran War, high energy prices, and trade tensions. The downward revision of global economic growth rates until 2026 is attributed to energy market disruptions, supply chain deterioration, and the potential for inflation caused by the Iran War. Notably, geopolitical crises are not temporary phenomena but can have a lasting impact on economic structures, drawing even greater attention. According to the PIIE report, the global real GDP growth forecast has been lowered from the previous 3.3% to 3.0%. The instability arising from the Iran War is particularly accelerating inflation through rising energy prices. It is noteworthy that even after a ceasefire was announced, oil prices remain 30-40% higher than before the war. This clearly indicates the energy market's sensitivity and structural instability. As of early 2026, international Brent crude oil prices have somewhat stabilized after an initial surge at the outbreak of the war, but they continue to show high volatility, hovering around $90-100 per barrel, raising concerns among market participants. Such oil price increases not only reduce household purchasing power but also lead to higher industrial fuel and raw material costs, shaking the manufacturing structure. According to an analysis by Moneybase, the energy shock is directly reducing household purchasing power, and soaring oil prices are leading to higher food and intermediate goods prices, further fueling inflation. This is particularly causing significant fluctuations in the prices of agricultural products like vegetable oil and wheat flour. This, in turn, leads to increased household burdens, further exacerbating living costs for low-income households. International financial institutions are also closely monitoring this situation. Both developed and emerging economies are experiencing rising inflation, but emerging economies are particularly hard hit by high oil prices and rising import costs. Countries highly dependent on energy imports are facing the double burden of worsening current accounts and currency depreciation. This situation shows a pattern similar to the global price surges observed during the 1970s oil crisis, with some economists even warning of the possibility of long-term stagflation. The aftermath of the Iran War is also causing severe disruption to energy supply chains and logistics systems. As Iran and its neighboring countries are responsible for a significant portion of the world's crude oil and gas supply, continued geopolitical conflict increases the likelihood of crude oil supply disruptions. Concerns about the security of energy transport routes passing through strategic chokepoints like the Strait of Hormuz are growing, leading major shipping companies to re-evaluate Middle East routes and seek alternative paths. RSM US's analysis points to the rapid fragmentation of global trade patterns. Following the Iran War, global manufacturers are attempting to secure new supply chains to respond to supply chain risks, but this is expected to lead to long-term cost increases and reduced efficiency. European countries, in particular, face significant challenges in terms of energy security. The decrease in Europe's natural gas reserves and the surge in prices are directly affecting industrial production and household heating costs, which could lead to an overall economic slowdown in Europe. Changes in various shipping and air logistics routes are increasing international trade costs and further exacerbating imbalances between exporting and importing countries. Increased container shipping costs, higher insurance premiums, and delivery delays due to rerouting are negatively impacting global trade volume. Industries relying on just-in-time (JIT) production, such as automotive and electronics, are experiencing production disruptions due to component supply issues. The acceleration of de-globalization is also a concern. Companies are adopting nearshoring and friendshoring strategies to enhance supply chain resilience, but this could lead to increased costs in the short term and reduced efficiency in the global division of labor in the long term. The Iran War is acting as a catalyst, further accelerating the ongoing trend of supply chain restructuring. As South Korea is highly dependent on crude oil and gas imports, the impact of the Iran War on its domestic economy is even greater. Korea relies on imports for over 95% of its energy, and its high reliance
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