Iran's War Ignites a Global Race to Build Stockpiles Amid Energy Crisis Concerns

SadaNews - Business surveys expected to be released this week are anticipated to reveal the ongoing global rush to stock up on manufactured goods amid fears of an energy supply crisis, as the Iran war enters its third month.

Purchasing Managers' Index (PMI) indicators for May, which measure industrial activity in major economies, are likely to show continued expansion across all economies covered by Bloomberg's analyst surveys, often supported by proactive stockpiling efforts.

Market attention will be focused on whether the industrial activity reflected in the data, to be released from Australia to the United States on Thursday, indicates actual economic strength, or is merely a final attempt by companies before the energy shock deepens.

Indicators Show Industrial Expansion Supported by Stockpiling

The indicators will also reveal the extent to which major economies are affected by rising costs, amid expectations that data will show signs of supply chain bottlenecks similar to those caused by production fluctuations during the pandemic.

These two phenomena may fuel the underlying inflationary pressures currently being monitored by central banks ahead of the next round of major monetary policy decisions scheduled for June.

Initial results from the PMI indicators will provide additional insight into the geographic disparity in the impact of the war currently unfolding in the Middle East. April data showed that the Eurozone economies, including Germany, were the most affected, while countries from Britain to Japan appeared more stable.

Furthermore, these surveys will allow investors to assess the war's repercussions during a week when global economic attention is heightened, following U.S. President Donald Trump's attempts to reset relations with Chinese President Xi Jinping.

While tangible outcomes from that meeting are still emerging, G7 finance ministers will discuss global growth and disruptions in bond markets during a two-day meeting in Paris starting Monday, focusing on increasing imbalances and rare metals.

On Thursday, the European Commission will publish its latest economic forecasts for the region, while the closely watched German Ifo business confidence index will be released the following day, alongside a similar French index.

Opinions of Bloomberg Economics Experts:

"The Eurozone's GDP has only grown by 0.1%. The Iran war and the shock related to commodity prices have already begun to weaken the economy, even though the conflict only started in late February. While spending details are not yet available, country-level data indicates that domestic demand has come under pressure due to rising energy prices."

-David Powell, Senior Eurozone Economist at Bloomberg Economics.