Remember that simple 4-stage economic framework I shared with you at the start of the Middle East conflict?

It’s important to recognize that our current inflation concerns are a direct part of this progression, which started with a concentrated price shock (energy and borrowing costs -- Stage 1) and has now expanded to also include a broader inflation shock (Stage 2).

Stage 3 is demand destruction (lower growth), and the least resilient economies—especially those facing physical energy shortages—are already dealing with such stagflationary tendencies.

All of which increases the risk of Stage 4: Financial instability.

What makes this cycle more complicated is the desynchronized aspect. While some especially vulnerable African and Asian economies are already reeling from Stages 1 through 3, others, like the US, are largely resisting Stage 3 for now.

#economy #markets #middleeastwar