March PMIs: scent of stagflation

However, supplies from the region have become critical for other commodities. Nitrogen fertilisers derived from natural gas, such as urea and ammonia, account for more than half of global consumption. Gulf countries produce around 20% of global output and account for nearly 40% of seaborne trade. Disruptions through the Strait risk pushing up food prices and increasing food insecurity in the coming months, as highlighted by the IMF.¹

Another critical material is helium, with Qatar supplying over 40% of global seaborne trade. Also derived from natural gas, helium is essential for semiconductor production and for operating MRI scanners. Rising costs and reduced availability risk slowing semiconductor output, thereby affecting investment in data centres and artificial intelligence.

Uneven regional exposure

The prolonged blockade of the Strait of Hormuz therefore increases the risk of a new global stagflation shock. However, an analysis of trade flows suggests that the impact is far from uniform across regions (see Chart 3).

Chart 3: Import quotas from Persian Gulf countries

Emerging economies, particularly in Asia, are the most exposed. Many depend heavily on Gulf energy supplies and could face difficult choices, including rationing energy use if the blockade persists. They are also more vulnerable to rising food prices, given the higher share of food in household spending. In addition, semiconductor production in Taiwan, South Korea and, to a lesser extent, China is likely to be affected by tighter helium supply and higher costs.

At the other end of the spectrum, the United States appears only mildly affected. As the world’s largest producer of oil and natural gas, and a major supplier of fertilisers and helium, it could even benefit in some respects. However, while domestic availability is not at risk, the US economy is still exposed to higher global prices for these inputs.

Europe, including Switzerland, appears moderately exposed. Oil exports from the Saudi port of Yanbu on the Red Sea have so far continued without major disruption, helping to limit supply shortages. As in the United States, the main risk for Europe comes from rising prices—already visible in energy and semiconductors, and likely to extend to food as fertiliser and diesel costs increase.

In conclusion, the prolonged disruption of maritime trade through the Strait of Hormuz represents a global supply shock that could push the world economy toward stagflation, echoing the experience of the 1970s. However, exposure varies significantly across regions, with Asian economies facing the greatest risks.