May 1: Impact of US-Iran War on International Economy, Financial Markets, and People's Livelihoods
The ongoing Middle East conflict is causing global economic slowdown and accelerating inflation. Fertilizer shortages and soaring fuel costs are driving up rice prices, and central banks (Bank of England, ECB) are holding interest rates but hinting at future hikes.
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- 📰 Published: May 1, 2026 at 17:28
- 🔍 Collected: May 1, 2026 at 17:32 (4 min after Published)
- 🤖 AI Analyzed: May 1, 2026 at 18:40 (1h 8m after Collected)
Major news on the US-Iran War
Central News Agency
(Central News Agency, Taipei 1st, Comprehensive Foreign News Report) The Bank of England and the European Central Bank (ECB) announced they would maintain interest rates, warning of increasing risks to economic growth and inflation prospects amid the ongoing Middle East conflict. This conflict is causing fertilizer shortages and a surge in fuel costs, which could lead to a global surge in rice prices.
● Oil prices rise and geopolitical uncertainties lead French people to prefer nearby, cheaper summer vacations
Disruptions to Middle East energy transportation have led some French airlines to cancel a large number of flights. Transavia, a subsidiary of Air France-KLM, announced the cancellation of hundreds of flights in the coming weeks, citing rising jet fuel prices and import disruptions from Gulf countries.
Since the outbreak of the US-Iran War at the end of February this year, air ticket prices have continued to rise. Thierry Bros, a professor at Sciences Po and an energy expert, said that fuel costs can account for up to 40% of budget airline ticket prices, making it harder for these companies to absorb rising fuel prices when their profit margins are already low.
Libération, citing survey data from Alliance France Tourisme, reported that due to rising oil prices and inflation, and geopolitical instability, some French people have changed their summer vacation plans, tending to travel to nearby, less expensive places, or shorten their trips. As many as 86% of respondents insisted on taking a vacation, but 71% chose to stay within France, three percentage points more than in 2025.
● War and climate combine to tighten global rice supply, potentially pushing up prices
Due to fertilizer shortages and soaring fuel costs triggered by the Iran war, farmers in many Asian countries have reduced their planting areas. Coupled with the potential for further production compression by the El Niño phenomenon, the global rice supply may decline.
Rice is the most consumed staple crop globally and is crucial for world food security. Even minor supply disruptions can trigger chain reactions across countries, pushing up prices and increasing household burdens, especially in price-sensitive regions like Asia and Africa.
● Middle East War impacts European economic divergence: France stagnates, Germany and Spain maintain growth
Under the impact of the Middle East War, economic performance varied among European countries in the first quarter. The French National Institute of Statistics and Economic Studies (INSEE) stated that due to weak domestic demand and a significant decline in foreign trade, France's economy showed zero growth in the first quarter of this year.
Official data released by Spain showed strong economic performance, successfully resisting the turmoil caused by the Middle East War, with economic growth of 0.6% in the first quarter, in line with market expectations. According to preliminary data from the German Federal Statistical Office (Destatis), Germany's economic output grew by 0.3% compared to the previous quarter, slightly higher than expected. However, the energy shock caused by the war threatens to derail this growth momentum.
● US Q1 GDP growth below expectations, Middle East War impacts lead to sharp inflation increase
Newly released preliminary data showed that with cooling consumer spending, the US first-quarter GDP preliminary value grew at an annualized rate of 2%, lower than market expectations of 2.2%, but higher than the 0.5% increase in the fourth quarter of last year. At this time, the impact of the Middle East War began to emerge, pushing up inflation sharply in the same month.
The Commerce Department stated in another report that the US-Iran War boosted energy prices, leading to a sharp rise in the core Personal Consumption Expenditures (PCE) price index, a preferred inflation indicator of the Federal Reserve. Consumers faced higher price pressures in March, posing new challenges for the Federal Reserve's decision-making.
● Bank of England resolves to keep interest rates unchanged, hints Middle East situation may trigger rate hikes
The Bank of England resolved to keep its benchmark interest rate at 3.75% and warned that if the Middle East conflict continues to push up inflation, further rate hikes may still be necessary in the future. Governor Andrew Bailey stated that given the current economic conditions and uncertainties in the Middle East, "interest rates are at a reasonable level at present."
The Bank of England also revised down its GDP growth forecast for 2026 to between 0.7% and 0.8%, and for 2027 to between 0.8% and 1.0%. In comparison, the previous forecast was 0.9% for this year and 1.5% for 2027.
● Middle East war risks escalate, European Central Bank keeps interest rates at 2%
The European Central Bank (ECB) maintained its benchmark interest rate at 2% and warned that risks to economic growth and inflation prospects are increasing due to the Middle East war.
The ECB stated in its decision announcement: "Risks of rising inflation and falling economic growth have both intensified. The longer the war continues and the longer energy prices remain high, the stronger the impact on overall inflation and the economy may become." (Editor: Hong Qiyuan) 1150501
Central News Agency
(Central News Agency, Taipei 1st, Comprehensive Foreign News Report) The Bank of England and the European Central Bank (ECB) announced they would maintain interest rates, warning of increasing risks to economic growth and inflation prospects amid the ongoing Middle East conflict. This conflict is causing fertilizer shortages and a surge in fuel costs, which could lead to a global surge in rice prices.
● Oil prices rise and geopolitical uncertainties lead French people to prefer nearby, cheaper summer vacations
Disruptions to Middle East energy transportation have led some French airlines to cancel a large number of flights. Transavia, a subsidiary of Air France-KLM, announced the cancellation of hundreds of flights in the coming weeks, citing rising jet fuel prices and import disruptions from Gulf countries.
Since the outbreak of the US-Iran War at the end of February this year, air ticket prices have continued to rise. Thierry Bros, a professor at Sciences Po and an energy expert, said that fuel costs can account for up to 40% of budget airline ticket prices, making it harder for these companies to absorb rising fuel prices when their profit margins are already low.
Libération, citing survey data from Alliance France Tourisme, reported that due to rising oil prices and inflation, and geopolitical instability, some French people have changed their summer vacation plans, tending to travel to nearby, less expensive places, or shorten their trips. As many as 86% of respondents insisted on taking a vacation, but 71% chose to stay within France, three percentage points more than in 2025.
● War and climate combine to tighten global rice supply, potentially pushing up prices
Due to fertilizer shortages and soaring fuel costs triggered by the Iran war, farmers in many Asian countries have reduced their planting areas. Coupled with the potential for further production compression by the El Niño phenomenon, the global rice supply may decline.
Rice is the most consumed staple crop globally and is crucial for world food security. Even minor supply disruptions can trigger chain reactions across countries, pushing up prices and increasing household burdens, especially in price-sensitive regions like Asia and Africa.
● Middle East War impacts European economic divergence: France stagnates, Germany and Spain maintain growth
Under the impact of the Middle East War, economic performance varied among European countries in the first quarter. The French National Institute of Statistics and Economic Studies (INSEE) stated that due to weak domestic demand and a significant decline in foreign trade, France's economy showed zero growth in the first quarter of this year.
Official data released by Spain showed strong economic performance, successfully resisting the turmoil caused by the Middle East War, with economic growth of 0.6% in the first quarter, in line with market expectations. According to preliminary data from the German Federal Statistical Office (Destatis), Germany's economic output grew by 0.3% compared to the previous quarter, slightly higher than expected. However, the energy shock caused by the war threatens to derail this growth momentum.
● US Q1 GDP growth below expectations, Middle East War impacts lead to sharp inflation increase
Newly released preliminary data showed that with cooling consumer spending, the US first-quarter GDP preliminary value grew at an annualized rate of 2%, lower than market expectations of 2.2%, but higher than the 0.5% increase in the fourth quarter of last year. At this time, the impact of the Middle East War began to emerge, pushing up inflation sharply in the same month.
The Commerce Department stated in another report that the US-Iran War boosted energy prices, leading to a sharp rise in the core Personal Consumption Expenditures (PCE) price index, a preferred inflation indicator of the Federal Reserve. Consumers faced higher price pressures in March, posing new challenges for the Federal Reserve's decision-making.
● Bank of England resolves to keep interest rates unchanged, hints Middle East situation may trigger rate hikes
The Bank of England resolved to keep its benchmark interest rate at 3.75% and warned that if the Middle East conflict continues to push up inflation, further rate hikes may still be necessary in the future. Governor Andrew Bailey stated that given the current economic conditions and uncertainties in the Middle East, "interest rates are at a reasonable level at present."
The Bank of England also revised down its GDP growth forecast for 2026 to between 0.7% and 0.8%, and for 2027 to between 0.8% and 1.0%. In comparison, the previous forecast was 0.9% for this year and 1.5% for 2027.
● Middle East war risks escalate, European Central Bank keeps interest rates at 2%
The European Central Bank (ECB) maintained its benchmark interest rate at 2% and warned that risks to economic growth and inflation prospects are increasing due to the Middle East war.
The ECB stated in its decision announcement: "Risks of rising inflation and falling economic growth have both intensified. The longer the war continues and the longer energy prices remain high, the stronger the impact on overall inflation and the economy may become." (Editor: Hong Qiyuan) 1150501