Middle East tensions hit global economy

The conflict in the Middle East has disrupted traffic through the Strait of Hormuz, leading to a systemic economic shock that has reverberated through energy markets, industrial supply chains and critical maritime routes.

As part of its response to U.S. and Israeli attacks, Iran has restricted navigation through the Strait of Hormuz, targeting ships associated with the United States and Israel. The blockade of this vital global energy route has driven up oil and gas prices worldwide.

As a key energy shipping lane, the strait saw 20 million barrels crude and oil product flowing through per day, around 25 percent of the world's seaborne oil trade in 2025, according to a report released by the International Energy Agency (IEA) this March.

In addition, about 20 percent of global liquefied natural gas (LNG) trade transited Hormuz in 2024, primarily from Qatar, with a smaller volume from the United Arab Emirates (UAE).

Over 70 percent of the oil flowing through the strait is transported to the Asian market. Japan and Republic of Korea (ROK) import 90 percent and 95 percent of their respective oil consuption.

The IEA estimates that as of the end of March, Hormuz disruptions have led to an oil supply gap of roughly 10 million to 16 million barrels per day.

Though the IEA made 400 million barrels of emergency oil stocks available in March -- the largest-ever release coordinated by the agency, it still failed to curb the rapid rise in international oil prices.

Based on Fitch Ratings' March outlook, should the Middle East conflict persist until the end of June, it could see global real GDP growth shrink by approximately 0.8 percentage points.

"Shipping costs are rising because of insurance premiums, because of higher fuel costs, and because of longer trips as you have to avoid certain parts. Then that starts feeding through to higher prices of other goods as well. That could be food, commodities, etc. And then the other thing to think about is inventory and supply chain disruptions. And then when you combine all of these factors together, it feeds into producer price indices and consumer price indices," said Cedric Chehab, chief economist at BMI, a Fitch Solutions company.

Middle East tensions hit global economy

The Qingming Festival holiday from April 4 to 6 has unleashed China's consumption vitality on novel smart, green products and services.

The Qingming Festival, or Tomb-Sweeping Day, fell on April 5 this year. It is a traditional Chinese festival in which people pay tribute to the deceased and worship their ancestors. The holiday also provides a short break for people as they engage in outdoor activities and sightseeing.

According to data from the Ministry of Commerce, average daily sales at major retail and catering enterprises rose 2.4 percent year on year during the holiday. Foot traffic and turnover at 78 key pedestrian streets (business districts) monitored by the ministry increased by 6.0 percent and 6.7 percent, respectively.

As goods consumption continues to gain momentum, demand for smart and environment friendly products remained robust. As of Sunday, more than 1.526 million applications had been submitted under China's vehicle trade-in subsidy program this year, driving new car sales worth 246.8 billion yuan (about 36 billion U.S. dollars).

Sales of home appliances under trade-in programs, along with digital and smart devices, reached 62.845 million units, generating 215.97 billion yuan (about 31 billion U.S. dollars) in revenue. Increased outdoor travels during the holiday boosted sales of smart electronics, with data showing sales of smart glasses, and smart watches and fitness bands surging 3.2 times and 12.3 percent, respectively, on major e-commerce platforms.

Service-related consumption also remained strong during the holiday. Sales at key catering businesses monitored by the ministry rose 3.9 percent year on year, while cross-city trips on major platforms climbed 15.1 percent from a year earlier. Spending at theme parks increased 11.7 percent compared with the same period last year, and car rental orders jumped about 40 percent year on year.

Qingming holiday unleashes spending on novel products, services