Leading economic institutes attribute this downturn to an energy price shock resulting from the conflict, which is also expected to drive inflation to an average of 2.8% in 2023 and 2.9% in 2027. The disruption in oil and gas supply, particularly through the Strait of Hormuz, has exacerbated production and transportation costs, dampening consumer spending. Additionally, the labor market remains sluggish, with unemployment projected to rise slightly to 6.4% this year, as economic recovery is anticipated to be slow.