What a US-Iran war could mean for the economy

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An escalation of hostilities after a U.S. airstrike killed a top Iranian military commander could send shockwaves through the global economy, according to analysts. 

“The assassination of Qassem Soleimani, a major figure in the Iranian regime, in a U.S. airstrike last night has significantly raised the chances of an outright conflict between the U.S. and Iran,” Jason Tuvey, senior emerging markets economist for Capital Economics, wrote in a note Friday. 

“Our central scenario is that the global economy will bottom out in the early part of this year and recover thereafter,” he added. “But the outbreak of war between the U.S. and Iran would put the recovery on ice.” 

Qassem Soleimani, head of Iran’s Islamic Revolution Guard Corps’ Quds Force, was killed by an airstrike in Baghdad ordered by President Donald Trump, the Department of Defense said in a statement Thursday.  The Defense Department said that Soleimani was actively planning to attack American personnel in the region.

Iran’s Supreme Leader Ayatollah Ali Khamenei vowed to inflict “severe retaliation” on those involved in Soleimani’s death, according to a statement cited by media.

“Clearly, the major concern for the world economy is that events spiral out of control and the U.S. launches a full-blown military assault on Iran,” Tuvey said. “The resulting collapse in Iran’s economy could knock as much as 0.3%-pts off global GDP – equal to our estimate of the damage from the US-China…


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