David McNamara: Middle East conflict risks global macro shock

Energy prices and economic confidence will be influenced by the Iran conflict

A man holds an Iranian flag as he looks at the damaged façade of Gandhi Hospital in Tehran. Picture: AP Photo/Vahid Salemi

The US and Israeli attacks on Iran, and Iranian escalation to other Gulf states over the weekend, raises the risk of a spillover to the global economy, although the impact on markets so far looks contained.

While the societal cost in the Middle East could prove devastating, regional conflicts typically do not spill over to wider macroeconomic shocks. So far, markets have been jolted by the current conflict, with safe haven assets gaining, such as gold and the US dollar, alongside rising energy prices and lower equities.