Gopinath Warns Fiscal Space ‘Depleted’ for Long-Lasting Iran War
Tehran's skyline covered with clouds and smoke after overnight strike on the Tehran Oil Refinery on March 8.
Photographer: Atta Kenare/AFP/Getty Images
Governments around the world don’t have the fiscal capacity needed to respond to any economic downturn caused by an oil shock fueled by prolonged war in Iran, the IMF’s former top deputy and chief economist warned Tuesday.
In an interview with Bloomberg News, Gita Gopinath said the world economy is already facing a slowdown in growth in 2026 due to higher oil prices in the wake of the conflict that erupted less than two weeks ago. Crude oil now looks more likely to average $75 a barrel this year than the $65 figure built into many forecasts, she said.