Recent business surveys indicate that the spillover effects from the conflict in Iran are severely damaging economic growth momentum and driving up prices, showing early signs of synchronized global economic turbulence. Various Purchasing Managers' Index (PMI) figures compiled by S&P Global showed significant declines in March. Data released on Tuesday revealed that the Eurozone's composite PMI fell more than economists had anticipated, Australia's composite indicator plunged into contraction territory, and manufacturing activity in India slowed to its weakest level since 2021. Concurrently, multiple price indicators surged substantially: input cost inflation in Germany, Europe's largest economy, accelerated to its highest rate in over three years, while a similar measure for UK manufacturing recorded its largest increase since 1992. This preliminary data, collected in late March, reflects growing pessimism among global businesses regarding the escalating conflict in Iran and its broadening spillover effects. Collectively, these indices provide an initial glimpse into the conflict's impact on global economic prosperity—it has delivered a direct and damaging blow to critical energy supplies essential for the functioning of the world's major economies. Policymakers worldwide are on high alert. The President of the European Central Bank stated last week that the conflict, triggered by strikes initiated by the U.S. President, has intensified "upside risks to inflation and downside risks to growth." Both the European Central Bank and the Bank of England have adopted a hawkish, vigilant stance, with a potential interest rate hike in the Eurozone as early as next month; the Bank of Japan is also preparing for potential action in April, while the Reserve Bank of Australia has already raised rates for the second consecutive time. Economist Jamie Rush commented, "Prior to the outbreak of the Iran conflict, our global growth tracker indicated the world economy was gathering momentum. However, the latest PMI data from developed economies suggest this incipient recovery is being stifled by a combination of high oil prices, tightening financial conditions, and weak market confidence." The data released on Tuesday did not yet include U.S. indicators. So far, all released composite PMIs covering both manufacturing and services sectors across the globe have shown marked declines. In order of release, these economies include Australia, Japan, India, France, Germany, the Eurozone as a whole, and the UK. Manufacturing activity in the Eurozone unexpectedly improved, but analysis from S&P Global suggested this might be partly due to customers stockpiling goods in anticipation of supply disruptions. Combined with near-stagnant service sector activity and a composite index hitting a ten-month low, the overall picture is concerning, particularly with price indicators rising significantly. Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, noted, "With the Middle East conflict substantially driving up prices and suppressing growth, the preliminary Eurozone PMI is sounding a stagflation alarm." The UK's manufacturing performance also outperformed its services sector, but the composite PMI remained well below expectations. Factory gate prices rose sharply, marking the largest increase since the 1992 "Black Wednesday" sterling crisis. Williamson added, "The Bank of England faces a difficult trade-off in setting policy to balance risks to growth and inflation—needing to curb embedded inflation pressures while avoiding a hawkish rate path that exacerbates downside risks to the economy." Inflation data released in Japan on Tuesday unexpectedly slowed. Although the country's economy overall remains resilient, business activity indices still revealed the impact of the conflict. The future output confidence indicator fell to its lowest level in nearly a year. Data from India showed economic growth slowing to its weakest since 2022, while cost inflation hit a four-year high. Australia experienced the most dramatic reversal: its composite output index plummeted by over 5 points to 47, falling below the 50-point threshold that separates expansion from contraction. Weak services performance, coupled with a significant deterioration in manufacturing momentum, led S&P Global data to indicate that private sector activity in the country had contracted by the end of the first quarter. Simultaneously, S&P Global indices showed Australian business inflation reached a more than three-year high, highlighting the severe challenges facing the Reserve Bank of Australia. Economists surveyed predicted that PMI data for the U.S., due later on Tuesday, might show some resilience—manufacturing activity is expected to hold steady, while services activity could see a modest improvement. The U.S. President has claimed that Middle East peace talks are underway, despite ongoing conflict involving the U.S.-Israel alliance and Iran. However, even if hostilities cease, global policymakers will need to assess the damage already inflicted on growth and inflation prospects—damage that may have already knocked their economies off course. While S&P Global's indices provide broad coverage, they offer only limited clues for a full assessment. Rush pointed out, "The key questions for the future economic outlook remain how long the Strait of Hormuz will remain closed and how major central banks will respond to this shock."