SEB Chief Economist Warns Iran Conflict Has Targeted World Economy's Weak Points

The conflict in Iran has struck at the world economy's most vulnerable areas, according to SEB's chief economist Robert Bergqvist. Oil prices have reportedly risen by 25 percent since last Friday, while Asian stock markets have experienced significant declines.

Bergqvist stated that Iran has successfully targeted the world economy's weak points, creating a scenario where both uncertainty and unpredictability are increasing simultaneously. "In the current situation, we simply don't know where this is going. We lack a timeline and there is great uncertainty about the risk of geographical spread," Bergqvist said.

The economic impact is already visible through increased energy prices and falling stock markets. Bergqvist described the situation as a "nightmare scenario" for stock markets because it increases the risk of stagflation - stagnant growth alongside rising inflation.

Meanwhile, Germany's industrial sector has shown unexpectedly weak performance at the start of the year, with industrial orders falling by 11.1 percent in January compared to the previous month, according to statistics agency Destatis. This decline was significantly worse than the 4.5 percent drop analysts had expected.

Analysts note that the war in Iran and rising oil prices are casting an increasingly long shadow over economic recovery prospects. Germany's economics ministry warned that developments in the Middle East, which have not yet been reflected in indicators, along with rising global oil and gas prices, mean the risk of setbacks in industrial recovery has "increased significantly."

Despite the concerning indicators, Bergqvist noted some positive factors for Sweden, including strong public finances that could support the economy if needed, though he cautioned they must be used carefully to avoid reigniting inflation.