How the War in Iran Is Transforming the Global Economy
Key takeaways
- It predicts that inflation will remain well above expected levels, too.
- Harrell is also a visiting scholar at Georgetown’s Institute for International Economic Law.
- What has been the biggest economic impact of the war, and in what ways is this impact different, or not, from what you were anticipating several months ago?
This week, the Organization for Economic Cooperation and Development estimated that, even if the United States and Iran soon reach a permanent ceasefire agreement, worldwide economic growth will continue to suffer at least into 2027, and perhaps beyond. It predicts that inflation will remain well above expected levels, too. The war, which has led to the closure of the Strait of Hormuz, has disrupted the flow of global energy supplies. Countries in Asia, which are highly reliant on oil and gas that comes from the Middle East, have been particularly affected.
I recently spoke by phone with Peter Harrell, a non-resident fellow at the Carnegie Endowment for International Peace and an expert in trade and economic policy, to try to understand how the war may affect the global economy in the short and long term. Harrell is also a visiting scholar at Georgetown’s Institute for International Economic Law. During our conversation, which has been edited for length and clarity, we discussed why Trump has been able to convince markets that a peace deal is imminent, how much worse things could get without a quick deal, and the places around the world where the war has caused the most damage.
What has been the biggest economic impact of the war, and in what ways is this impact different, or not, from what you were anticipating several months ago?