Capital Economics says a fragile temporary US-Iran peace deal should lower the
near-term risk of more severe macro and market scenarios. Chief economist Neil
Shearing warns oil flows via the Strait of Hormuz will take time to normalize as
tankers are not yet in position and production and refining capacity remain
below full output. The deal will not avert short-term upward pressure on
inflation or prevent a hit to global growth in Q3; Capital Economics expects Q3
growth to be below trend rather than a recession. GDP growth outside the Gulf
should recover to roughly pre-war levels of about 3% by end-2026 or 2027.
