U.S. economist Mohamed El‑Erian, a consultant for the insurance group Allianz, warns that the war in Iran will have “serious structural effects” on the global economy. He even suggested that Germany consider a nationwide speed limit as a way to curb energy consumption.
El‑Erian told the magazine “Spiegel” that countries could motivate their citizens to lower their energy use by encouraging people to work from home, or, in other places, by implementing traffic‑speed restrictions. “That is a concrete example of what could be done” he said.
He disapproved of gasoline price controls, describing himself as a “purist” and believing such measures would not work. Instead, he advocated for targeted financial relief, such as support for the most vulnerable groups, to help ease the economic burden.
According to El‑Erian, the Middle‑East conflict is already causing irreversible damage. Even if the fighting ended today, he expects a period of higher energy prices, elevated inflation and increased interest rates to persist. Further damage to the Gulf states’ energy infrastructure would only intensify these problems and threaten economic and financial stability. “Inflation is out of the bottle” he said, warning that it would not be easy to re‑contain.
For Europe, he estimates a 35 % probability of a recession at present. He believes that Germany, with its fiscal flexibility, can undertake structural reforms to offset the impact of the Iran war. A “coordinated regional approach” could also mitigate the crisis across the continent. To that end, El‑Erian advocates for joint sovereign debt issuance-essentially a form of Eurobonds. He cautioned that if each European state acted alone, it could be difficult, noting that France, for example, has very limited fiscal space.
When assessing the U.S. economy, El‑Erian points to significant inflationary and growth risks, as well as threats to financial stability, and he compares the current situation to previous financial crises. He noted that after President Trump issued an ultimatum to Iran over the weekend, indications emerged that liquidity stresses could hit global financial markets. Trump reportedly changed course and extended the ultimatum, adding further uncertainty.