Oxford Economics, in its latest Global Risk Survey, points out that business growth expectations have remained firm since the outbreak of war in the Middle East.
But respondents judge that the chance of a sharp downturn has risen, with a one-in-six chance of global recession this year.
The survey fonds that overall, businesses continue to anticipate a solid pace of global expansion in the year ahead. Expected growth in 2026 has weakened only slightly, with a 0.2ppt downgrade to mean expectations since war began.
This contrasts with the much larger 1.3ppt downgrade in expectations following Russia’s invasion of Ukraine.
However, there are signs that the US economy is increasingly being viewed as a potential casualty of war.
Prior to the outbreak of war, more than three quarters of respondents judged that the period of US exceptionalism was set to continue. But this figure has fallen significantly in the past week, with little more than half of businesses now expecting the US to remain the fastest growing G7 economy this year.
There has been a substantial increase in concerns over developments in the Middle East, with around two in three businesses viewing the region as a very significant risk to the global economy over the next two years.
At the same time, business fears over a global trade war have continued to recede. Only 27% of respondents view a global trade war as a very significant risk to the global economy over the next two years, down from more than half of respondents six months ago.