The International Monetary Fund and World Bank are historically beacons of free trade, capitalism and financial market wisdom. But at their spring meetings, the emerging theme has a contrarian vibe: Investors are underestimating the economic damage from the Iran war.
Across public panels, private dinners and other meetings on the sidelines of this week’s events in Washington6, the growing consensus is that the impact of the conflict on the global economy is likely to get significantly worse before it gets better — even if a lasting peace is negotiated soon.The world is witnessing more than just another shock, according to government officials and other participants who spoke in the opening days of the talks. What’s likely to take root, they caution, is structural change involving higher costs, longer trade routes and a denser cloud of geopolitical uncertainty that will mean a world with a slower growth potential.
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