Global Growth Outlook: Global growth is projected to slow to 2.5% in 2026 before firming in 2027-28 as energy supplies recover and trade strengthens, according to World Bank assessments. The IMF has revised global growth projections slightly up to 3.3% for 2026 and 3.2% for 2027, though risks remain skewed toward downside due to geopolitical tensions and financial market volatility.
Oil Price Shock and Inflation: Oil prices have surged to near $97 per barrel following US-Iran exchanges in the Strait of Hormuz, reviving inflation concerns globally. Eurozone inflation climbed to 3.3% in August, up from 2.9% in July, with energy inflation accelerating to 14.3%, while core inflation eased slightly to 2.4%. In the US, economists expect headline CPI to remain at 3.4% year-on-year, with input-price indices climbing from 70.3 to 72.6, suggesting resilient demand and higher energy costs keeping inflation pressure alive.
US Economic Indicators: US markets closed with investors awaiting inflation data for signals on interest rate trajectory, as Fed officials project a stronger economy while Wall Street frets over oil price impacts. The US 10-year Treasury yield traded around 4.8% after Friday’s employment report, with the two-year yield briefly above 4.4%, reflecting high yields and a hawkish Fed backdrop. Recent Non-Farm Payrolls and retail sales data have shown clear signs of deterioration, raising concerns about economic momentum.
China’s Slowdown: China’s economy expanded by 4.3% in Q2 2026, its weakest pace since Q4 2022, raising concerns about the world’s second-largest economy amid property sector stress and weak consumer demand. The slowdown has implications for global commodity markets and trade flows, particularly affecting emerging economies dependent on Chinese demand.
South Korea’s Semiconductor Boom: South Korea’s economy grew faster than expectations in Q2, driven by a semiconductor export boom powering AI and digital infrastructure, with GDP rising 0.6% quarter-on-quarter or 3.7% year-on-year. The tech-driven growth contrasts with broader regional slowdowns and highlights the strategic importance of chip manufacturing in the global economy.
India’s GDP Growth Under Scrutiny: India’s reported 7.8% GDP growth has been met with scepticism over methodology and long-term durability, especially given a weak monsoon season affecting agricultural output. Economists and analysts are questioning the sustainability of the growth trajectory and calling for more transparent data practices, even as India remains among the fastest-growing major economies.
Emergency Credit Line for Indian Businesses: The Emergency Credit Line Guarantee Scheme (ECLGS) 5.0 is providing additional credit support to eligible Indian businesses affected by external economic disruptions, using government-backed credit guarantees to support working capital. The scheme aims to facilitate additional credit of up to ₹2.55 lakh crore and operates until March 31, 2027, or until guarantees amounting to that limit are issued.
Currency Markets: The Euro edged down to $1.1605 as the US Dollar ticked up, with investors turning cautious at the start of the US CPI week. The British Pound struggled near $1.3510 amid thin trading volumes due to the Labor Day holiday and escalating US-Iran confrontations, while the South African Rand gained support from recovering gold prices despite geopolitical and inflation risks.
UN Cash Crunch: The United Nations is facing a cash crunch with late payments, including more than $2 billion in unpaid US dues, forcing dramatic cuts across programmes. President Trump recently signed a bipartisan spending bill preserving US funding for the UN, but the system’s financial strain continues to affect operational capacity.
Brazilian Judge Suspends Lithium Mining: A Brazilian judge ordered the suspension of environmental licenses and mining activities at Sigma Lithium’s Grota do Cirilo mine, according to court documents seen by Reuters. The decision affects global lithium supply chains and underscores growing environmental scrutiny of critical mineral extraction.