Global Economy Shows Signs of Recovery Following End of US-Iran War

The global economy has entered a recovery phase after the conclusion of the war between the US and Iran. The decline in energy prices and the achievement of peace before inflationary effects became permanent have limited economic damage.

Scraper SystemJune 21, 2026, 10:34 AM

Global Economy Shows Signs of Recovery Following End of US-Iran War

The US-Iran war has ended. While not as severe as feared, it impacted the global economy. Recovery is beginning to show its first signals, primarily in energy and inflation. The long-awaited peace has finally been approached. A memorandum of understanding has been signed. The task now remains to sign the official peace agreement. Although not as severe as feared, the war affected the global economy. Not only energy prices but also interest rates rose.

Nevertheless, at least a level of economic devastation that would lead to serious stagflation was avoided. Following the peace, markets are attempting to normalize. Oil prices had already begun to decline some time ago with the ceasefires; after the official announcements regarding peace, this decline became even more pronounced. Oil prices, which had risen to around $120 during the war period, have now retreated to $80.

Natural gas prices are also trending downward. It is not realistic to expect prices to return to pre-war levels immediately. Many facilities in Gulf countries were hit, or production was halted due to the closure of the Strait of Hormuz. Necessary repairs and a return to full production capacity will take time.

Qatar announced this week that its LNG production could reach 50% of capacity within one month and 80% within two months. The time to approach capacity will vary from country to country. It may take a period of 6-9 months for countries to get close to their full production capacities.

The end of the war before supply problems and price increases in energy excessively spilled over into other sectors was a major plus for the economy. Of course, inflation rates increased and expectations deteriorated, but peace was achieved before the war's inflationary effects fully transitioned from a temporary to a permanent status.

HIGH DEBT, HIGH RISK

In the post-peace period, interest rates have not yet shown as strong a reaction on a global scale as energy prices have. The increased budget deficits since the pandemic are raising risk premiums. Public debt ratios have risen significantly in many countries.

Bond investors are demanding higher interest rates to finance budget deficits under these conditions. Over the last five years, 10-year bond yields have risen from 1% to 4% in the US and from negative levels to 3% in Germany. Compared to the high double-digit figures in Turkey, nominal interest rates in these countries are still much lower.

However, the fact that public debt ratios and the pace of interest rate increases in these countries are well above the usual levels poses a significant risk. For the ratio of public debt to national income to decline, economies need to grow. But it cannot be said there is a strong story on the growth side. For the past two years, developed countries have been trying to grow fueled by artificial intelligence investments.

Artificial intelligence is undoubtedly a technology with high potential. However, AI companies are not currently developing this technology in a way that will provide permanent and inclusive growth in the real economy. Meanwhile, technology companies are seeking approximately $6 trillion in financing for data center investments, which AI needs most. It is anticipated that $1.2 trillion of this will be met from the bond market.

Financial markets have largely directed their resources towards AI. Consequently, not much financial resource is left for the real economy, growth does not increase sufficiently, and debt ratios continue to remain at risky levels.

TURKEY HAS AN ADVANTAGE

It is predicted that the next global financial crisis could stem from high public debt ratios. Therefore, in the post-war period, debt ratios will be among the indicators markets will focus on most. The fact that Turkey's strongest side in macroeconomics is its debt level is critical in this regard.

Household and public debt ratios are at quite low levels compared to peer countries. While the ratio of public debt stock to GDP globally is close to triple-digit levels, in Turkey the ratio is below 30%. This situation could constitute a significant advantage for Turkey in the coming period.

To benefit from this advantage in the long term, we need low inflation, political stability, and a new growth narrative. Specifically regarding the war, we must assess the damage to inflation and continue on the path with structural solutions. May inflation had shown that the effects of the war shock were easing. If June inflation comes in at around 1% on a monthly basis, it would be a serious morale boost for disinflation.

In such a scenario, the Central Bank could initially return to weekly repo auctions, lowering the weighted funding cost from 40% to the policy rate level of 37%. Credit growth limits tightened during the war could be relaxed back to their previous levels. Afterwards, opportunities for gradual policy rate cuts could be evaluated based on maturing conditions.

The real economy needs this.

Global Economy Shows Signs of Recovery Following End of US-Iran War