The escalation of the conflict in Iran has increased global risks of economic stagflation. Diana Swonk, Chief Economist at KPMG, stated that when stagflation becomes entrenched, the only solution may be a "deep recession." Stagflation is a concerning economic scenario characterized by prolonged high inflation and weak economic growth.

Swonk noted: "The blockade of the Strait of Hormuz and the subsequent spike in oil prices have effects that go beyond a simple oil shock." In her opinion, the impact of the current situation is more severe than all previous oil crises in history. This directly increases various costs, leading to rising prices, and companies' intentions to hire employees have sharply decreased, affecting the labor market. With many intersecting factors, the risk of stagflation continues to grow.

Swonk's opinion aligns with that of market investors. She explained: "The likelihood of the Fed raising rates in the second half of the year is increasing, and I expect the Fed will be forced to take this step, followed by other central banks." (Jinse Finance)