Global Macro Research
MacroeconomicsThe monthly macro outlook video: March 2026
From inflation volatility to new diversification challenges, investors must adapt to a world where geopolitical shocks are now a permanent fixture.
Author
Paul Diggle
Chief Economist
Date: 17 Mar 2026
Financial markets have faced heightened volatility in recent weeks, driven by escalating conflict in the Middle East.
While the situation remains fluid, Chief Economist Paul Diggle sets out Aberdeen’s baseline and alternative scenarios for the conflict’s economic impact and explores how persistently elevated geopolitical risk is reshaping the investment landscape.
Key points:
- Baseline forecasts assume a short-lived conflict and elevated oil prices, adding to global inflation and subtracting from growth, with the largest impacts felt in energy-importing regions of Europe and Asia.
- Alternative scenarios model much higher oil prices and severe stagflation, highlighting the underappreciated risks of supply chain disruption and non-linear impacts on markets.
- Persistently elevated geopolitical risk is driven by shifting global power, economic weaponisation, technological rivalry, and fragile institutions, with critical supply chain chokepoints exposed to disruption.
- Inflation volatility is likely to remain high, undermining traditional diversification as bonds and equities increasingly move together; investors will need new sources of diversification and inflation protection.
- Rising geopolitical tensions are fuelling defence spending and a global scramble for critical minerals and infrastructure, with private capital set to play a key role in funding supply chain resilience and industrial policy.
Watch the video for more details.
