<div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>There is a strong possibility Australia could be </span><a href="https://www.9news.com.au/national/how-close-is-australia-to-recession-warning-signs-explained/f6c2e2a9-dc84-4f1c-8de3-d01c8e782eaa" rel="" target="_blank" title="headed for a recession"><span>headed for a recession</span></a><span> if the war against Iran spills into the second half of 2026, economists have warned.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Fears of a recession loom large as </span><a href="https://www.9news.com.au/national/trump-strait-of-hormuz-blockade-timeline-us-naval-strategy-failed-peace-talks-with-iran/2ccf08b9-a98b-4fec-8944-07df78cdf133" rel="" target="_blank" title="the battle for control over the Strait of Hormuz"><span>the battle for control over the Strait of Hormuz</span></a><span> enters a dramatic new phase and dashes any hope of a swift end to the conflict in the Middle East.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><a href="https://www.9news.com.au/world/us-israel-iran-war-live-updates-donald-trump-strait-of-hormuz-blockade-peace-talks-end/d0528cd0-11e3-4b7f-93d6-7c0501a3140f" rel="" target="_blank" title="If a peace agreement is reached by the end of June"><span>If a peace agreement is reached by the end of June</span></a><span>, economic growth in Australia would still be slashed by more than half to 0.7 per cent, pushing unemployment to over five per cent for the first time since 2021, according to Deloitte modelling conducted for the </span><a href="https://www.afr.com/policy/economy/recession-fears-rise-as-iran-talks-end-with-no-peace-deal-in-sight-20260412-p5zn6h" rel="" target="_blank" title="Australian Financial Review."><em><span>Australian Financial Review.</span></em></a></div></div><div><div id="adspot-mobile-medium"></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>LIVE UPDATES:</span></strong><span> </span><a href="https://www.9news.com.au/world/us-israel-iran-war-live-updates-donald-trump-strait-of-hormuz-blockade-peace-talks-end/d0528cd0-11e3-4b7f-93d6-7c0501a3140f" target="_blank"><strong><span>Peace plans shattered as Trump weighs more strikes</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/national/trump-strait-of-hormuz-blockade-timeline-us-naval-strategy-failed-peace-talks-with-iran/2ccf08b9-a98b-4fec-8944-07df78cdf133" target="_blank"><strong><span>'Blown to hell': Donald Trump announces US blockade of Strait of Hormuz</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Any longer than that, unemployment could teeter dangerously close to above six per cent, driving Australia to its first recession since the COVID-19 pandemic.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"The longer this conflict drags on, the worse it looks, including for Australia," AFR's Economic Editor John Kehoe told </span><em><span>Today</span></em><span>.</span></div></div><div><div class="OUTBRAIN" data-reactroot="" data-src="//www.9news.com.au/national/recession-prediction-for-australia-if-war-in-middle-east-continues-for-much-longer/d3988487-a252-4ae0-9a3d-f694f80eda54" data-widget-id="AR_5"></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"If it drags onto mid-year, the Strait of Hormuz doesn't get open and the oil doesn't start flowing through, there is a real possibility of a recession in Australia."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Kehoe said this worst-case scenario is edging closer to reality as US President Donald Trump struggles to find a solution to Iran's blockade of the critical waterway.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>He warned a recession in Australia becomes more likely every week that commercial vessels are locked out of the Strait.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>A prolonged war would spell bad news for the global economy, as well as local job and inflation data.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>FUEL CRISIS:</span></strong><span> </span><a href="https://www.9news.com.au/national/victoria-news-government-app-to-name-and-shame-petrol-stations/bb4ba147-860b-41ce-86a1-eab684f89cb7" target="_blank"><strong><span>State's petrol app to name and shame servos charging highest prices</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>WORLD:</span></strong><span> </span><a href="https://www.9news.com.au/world/world-news-hungary-election-results-viktor-orban-donald-trump-ally-loses-to-peter-magyar-in-result-that-will-rock-europe/e991f3ea-b1d5-425c-822c-76d282d534cd" target="_blank"><strong><span>Bombshell election win in Hungary will ring alarm bells in the Kremlin</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"Becoming more plausible because we're not seeing a lot of good news coming out of the Middle East," Kehoe added.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"We'd want to see something in terms of the Strait of Hormuz opening within the next few weeks.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"If it drags on much beyond that, you'd have to say the economic outcomes in Australia are not going to be good."</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>While Treasurer Jim Chalmers has flatly denied any suggestion of a recession, the RBA has flagged that a domestic recession could be a necessary evil to drive inflation down.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"We don't want to have a recession, but if it's hard to get inflation down, then we're going to have to deal with that, possibly," RBA governor Michele Bullock said.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><strong><span>READ MORE:</span></strong><span> </span><a href="https://www.9news.com.au/national/tourist-drowns-at-famous-northern-territory-swimming-hole/c160d352-7b09-408d-a335-d031b6eedb5a" target="_blank"><strong><span>Young woman drowns at famous Aussie swimming hole</span></strong></a></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>Chalmers said over the weekend that the Australian economy was weathering the Middle East fallout "from a position of relative strength".</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><span>"[We] know the effects of this crisis will be felt for a long time and as I've said, we are considering that as we prepare the budget," Chalmers said.</span></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><em><strong><span>NEVER MISS A STORY:</span></strong></em><span> </span><em><span>Get your breaking news and exclusive stories first by following us across all platforms.</span></em></div></div><div class="block-content"><div class="styles__Container-sc-1ylecsg-0 goULFa"><ul><li><em><strong><span>Download the 9NEWS App here via</span></strong></em><span> </span><a href="https://apps.apple.com/au/app/9news/id1010533727" target="" 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