The world economy has remained more stable than many analysts anticipated after the closure of the Strait of Hormuz, though BCA Research cautioned that recession risks could rise sharply if the disruption continues.
Chief Strategist Peter Berezin highlighted seven major factors that have helped support global growth so far, while warning that “the risk of a recession will increase meaningfully if the Strait of Hormuz remains closed into June.”
The first factor is the delayed nature of oil shocks. BCA Research explained that the full economic impact from spikes in oil prices generally takes time to emerge, with GDP growth usually suffering the most roughly a year after the initial shock.
Second, economies today are less dependent on oil consumption relative to output than they were decades ago, although BCA noted that modern supply chains are now far more interconnected.
Third, inflation expectations over the long term have stayed relatively contained, easing pressure on policymakers to aggressively tighten monetary policy.
Fourth, fiscal measures are helping offset some of the damage, including stimulus tied to the One Big Beautiful Bill Act and tariff-related rebates issued by the U.S. Treasury.
Fifth, businesses have increased precautionary inventory purchases, similar to the buying behavior seen during the COVID-19 pandemic.
Sixth, continued expansion in artificial intelligence investment has provided a major boost to economic activity, with spending on technology equipment and software climbing to a record 4.9% of GDP in the first quarter of 2026.
Seventh, oil markets remain heavily backwardated, reflecting investor expectations that the disruption to supply routes will not be permanent.
BCA Research said it remains neutral on global stocks for now, but warned it “will adopt a more defensive posture” should the energy shock continue for an extended period.
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