The bank warns escalating tensions will dampen economic activity and push inflation higher in the coming quarters.
BNP Paribas revised downward its global growth projections, citing heightened risks from the Middle East conflict. The bank expects slower economic expansion as geopolitical instability disrupts trade and supply chains, particularly in energy markets.
Prior forecasts had assumed a gradual easing of inflationary pressures, but the conflict introduces new upside risks. Comparable periods of regional instability, such as the 2011 Arab Spring, saw prolonged inflation spikes and reduced business confidence.
Markets have yet to fully price in the potential economic drag, with energy commodities showing early signs of volatility.