Global Recession Risk Looms as Iran War Threatens to Worsen in Next 4-8 Weeks
Leading economist Mohamed El-Erian warns the global economy has four to eight weeks to avoid a recession unless shipping straits reopen soon. The Iran war's impact on oil prices threatens to trigger economic contraction amid already elevated inflation concerns.
Recession Timeline Warning
The global economy has four weeks to eight weeks at most to avoid plunging into a recession, according to Mohamed El-Erian, the former CEO of Pimco. El-Erian said the globe will "avoid a recession, provided the straits are reopened in the next four to eight weeks," but warned "if they're not reopened in the next four to eight weeks, it will look very different."
Oil Price Impact on Inflation
Research from Goldman Sachs and Morgan Stanley both found that the Iran war's knock-on effect on oil prices has almost entirely canceled out the biggest consumer tax windfall in years. The consumer price index reached 3.3 percent on an annual basis, the highest level since May 2024, which was driven by a jump in energy prices.
Global Growth Downgrade
Ben May, director of Global Macro Research at Oxford Economics, said the firm was lowering its world GDP growth forecast by 0.4 percentage points to 2.4 percent because of expected prolonged disruption through the Strait of Hormuz.