Professor Ahsanul Alam Pervez
I predict the global economy will collapse due to a hike in energy prices and the blockade of strait of Hormuz. What we may see if the war is prolonged for another 2 weeks or more, here is a critical forecast :
My forecast captures the main danger, but I would frame it more precisely as a high risk of global economic seizure and partial financial breakdown, not an automatic full collapse of the entire world economy.
The distinction matters. A prolonged war of another two weeks or more, with Hormuz still effectively disrupted, would push the world into a far more dangerous zone because this is no longer only a military confrontation. It has already become an energy, shipping, inflation, currency, and confidence crisis at the same time. Reuters reports that about 20% of global oil and LNG flows normally pass through the Strait of Hormuz, and current disruptions have already driven Brent sharply higher, with some analysts warning that if the strait stays closed through April, prices could reach $150 or more per barrel.
If the war is prolonged by another two weeks, the first thing the world would likely face is a transition from a temporary shock into a persistent emergency pricing regime. Markets can absorb a few days of disruption by assuming a ceasefire is near, drawing on reserves, and repricing risk. But when the crisis extends, traders, insurers, governments, and industries start behaving as if the disruption is not short-lived. That changes everything. Oil stops being merely expensive and starts becoming the organizing force behind inflation, freight pricing, and industrial slowdown. Reuters has reported that oil has already surged dramatically during this war and that Asian markets in particular are reacting as if an oil-shock stagflation scenario is unfolding.
The most immediate critical forecast is a second-round inflation wave across the world. The first-round effect is obvious: crude, LNG, diesel, aviation fuel, shipping fuel. The second-round effect is more dangerous because it spreads quietly into food, fertilizer, electricity, plastics, chemicals, and manufactured goods. Once fuel becomes more expensive, transport costs rise. Once transport rises, food and industrial inputs rise. Once fertilizers and petrochemicals become scarce or costly, agriculture and manufacturing absorb the shock and pass it to consumers. Reporting on the current crisis already indicates that the shock is extending beyond crude into wider energy and industrial supply chains.
That is why the likely macroeconomic outcome of another two weeks of war is not just higher prices but stagflation: slower growth together with renewed inflation pressure. This is one of the hardest situations for central banks and finance ministries because the usual tools work against one another. If they tighten monetary policy to fight inflation, they depress investment and demand even more. If they loosen policy to support growth, they risk embedding the energy shock into prices and weakening their currencies. Reuters reports that Goldman Sachs has already lifted U.S. recession probability to 30% and warned that global growth could be cut by about 0.4 percentage points, potentially more in worse scenarios.
The second major forecast is that Asia becomes the first large casualty zone of the economic shock. This is because Asian economies are deeply exposed to imported energy, industrial inputs, and maritime trade. Reuters reports the largest monthly foreign outflows from key Asian equity markets since 2008, with investors pulling more than $50 billion from markets such as Taiwan, South Korea, and India during March amid oil-shock fears. Reuters also reports Goldman Sachs cutting India’s 2026 growth forecast to 5.9% from 7%, with higher inflation and pressure on the rupee tied directly to the war and crude disruption. This matters because once major Asian importers slow, the impact does not stay regional. It feeds back into export demand, commodity demand, global shipping, and investor sentiment worldwide.
A third forecast is a currency and balance-of-payments crisis across fragile import-dependent economies. In a prolonged war, countries that rely on imported fuel but have weak reserves, high debt, or persistent trade deficits would face a triple blow: a larger import bill, a stronger dollar, and capital flight. As energy prices rise, our central bank would spend reserves to defend their currencies or allow depreciation and import inflation to accelerate. That combination has historically been one of the fastest ways to push vulnerable economies like Bangladesh toward IMF support, austerity, and domestic instability. Mr Prime minister pls make your team ready to understand the super complicated economic crisis Bangladesh going to enter.
Prof Pervez is a Geopolitical Economist &
Chairman, NBER, University of Chittagong.
