Markets Have Stabilised, But the Global Economy Remains on Fragile Footing

NatWest argues that while the immediate energy shock from the Middle East conflict is fading, the global economy remains vulnerable as slowing growth, persistent inflation and structural supply-side challenges continue to weigh on activity.

• Flash PMI data suggest price pressures are easing across the UK, Eurozone and the United States, but business activity remains subdued, reflecting weaker consumer confidence, higher costs and lingering geopolitical uncertainty.
• Although oil prices have largely returned to pre-conflict levels, Europe remains exposed to future energy disruptions due to below-average gas storage, while climate-related shocks are increasingly viewed as a structural source of inflation.
• In the United States, manufacturing has strengthened, but much of the improvement reflects inventory rebuilding rather than sustained demand, suggesting the current expansion remains fragile despite moderating inflation.

Read the full report for NatWest's latest assessment of inflation, energy markets and the global economic outlook.