War in Iran Dents Business Optimism, but the Bet on Growth Remains

According to the latest edition of Grant Thornton’s International Business Report (IBR), optimism among mid-market businesses plummeted by six percentage points to 68% in the first quarter of 2026, driven by the war in Iran.

Business leaders are expressing significant concerns regarding the war’s impact on lead times and shipping or delivery costs; the proportion of those expecting these to increase rose by five percentage points to 47%. Concerns over a shortage of orders due to reduced demand also grew by four percentage points (to 48%).

The report further highlights a five-percentage-point rise in fears over geopolitical upheaval, with 51% of executives viewing it as a barrier to their business. According to 57% of respondents, this has translated into a four-percentage-point increase in concerns regarding economic uncertainty.

Resilience Built on Past Shocks

While the war will clearly continue to have negative consequences—especially if the Strait of Hormuz remains closed or restricted for an extended period—the paradoxical and somber reality is that mid-market firms now have a wealth of recent experience to draw upon. Due to the Russian invasion of Ukraine and COVID-19 pandemic measures, companies are now better equipped to absorb major market shocks.

This recent experience in managing energy market volatility and supply chain disruptions likely explains why profitability expectations remain unchanged, with 64% of businesses still anticipating growth.

Most appear to be hoping for a brief conflict they can weather; the proportion of those expecting to raise selling prices in response to inflationary pressures rose by only two percentage points, to 51%.

Expert Commentary

Greg Keith, CEO of Grant Thornton International, stated:

"The decline in optimism this quarter reflects the very real impact that geopolitical events, such as the war in Iran, have on businesses worldwide. However, other indicators highlight just how accustomed mid-market firms have become to navigating uncertainty. They built this resilience during the pandemic and the war in Ukraine. What matters now is how long this period of instability lasts. Mid-market businesses can adapt quickly, but prolonged uncertainty inevitably becomes more taxing."

Greg further added:

"Despite the dip in optimism, businesses continue to invest in technology, people, and innovation. This is a powerful signal. The fundamentals remain strong, and while leaders must react pragmatically to shocks of this nature, it is clear they remain focused on long-term management."

The experience of managing geopolitical crises, energy shocks, and fractured supply chains is also shifting how mid-market firms view sustainability—treating it as a strategic element of long-term resilience. How these approaches differ across regions and the business opportunities they create are explored in the report: "Scaling sustainability: How the mid-market is future-proofing growth."

This text was translated by AI.