Policymakers around the world are closely monitoring the latest developments in the Middle East to determine how to best address the economic consequences of a war with Iran.

During the International Monetary Fund and World Bank meetings in Washington, D.C. last week, CNBC interviewed more than 30 central bank governors, politicians, and policymakers, who expressed their deep concerns about the Iraq War and the biggest economic risks it could trigger.

These interviews came before Iran announced on Friday (April 17) that the Strait of Hormuz was fully open to commercial traffic during the ceasefire between Israel and Lebanon, and subsequently on Saturday (April 18) that it would close the vital energy chokepoint again due to the United States' failure to fulfill its obligations. US President Trump thanked Iran for opening the Strait on social media on Friday, but also made it clear that the US naval blockade of Iranian ports would remain in place until an agreement was reached with Tehran.

The course of the war is highly uncertain, and the long-term risks are of great concern.

The conflict with Iran became the core topic of discussion at this meeting, with many uncertainties remaining regarding the future course of the war.

At an event in Las Vegas, Trump stated that the war "should be over soon." Back on April 1st, he had predicted the war would last another two to three weeks. However, since then, conflicting information has emerged from Washington and Tehran, and the actual progress of peace negotiations has lacked clarity.

Pierre Gramegna, Managing Director of the European Stability Mechanism, said on the sidelines of the meeting: "I am constantly being asked whether this war will have a significant impact. My first answer is that it has already had an impact. Look at the changes in inflation rates over the past few months, look at the actual situation at gas stations around the world, and the impact is obvious."

When asked whether war and its effects would be long-lasting, he quoted Colombian writer Gabriel García Márquez, saying, "It is much easier to start a war than to end one." He added, "Starting a war does not require consulting anyone; you can decide on your own. But ending a war requires agreement from both sides, from multiple parties, and this uncertainty is clearly affecting our outlook for the future."

Last Thursday, as the conflict approached its eighth week, Trump stated that Washington and Tehran were close to reaching an agreement. However, French central bank governor François Villeroy de Galhau pointed out that policymakers "cannot simply bet on the most favorable scenario." He stated, "There is unprecedented uncertainty, even unknown factors. The war could prolong, not only in the energy sector but also potentially have ripple effects on other products. Therefore, we expect inflation to rise and economic growth to slow."

Swedish Finance Minister Elisabeth Svantesson also warned: "We haven't seen the full picture of this crisis yet, and it could be quite serious." She added: "Of course, it depends on the intensity and duration of the conflict, but it will affect people all over the world. Everyone will be affected in some way, so global demand will decline and economic growth will slow down."

The risk of stagflation has become the primary concern, with inflationary and growth pressures compounding each other.

Many respondents focused on the challenge of a coexistence of slowing economic growth and rising inflation, with the risk of stagflation being considered one of the most concerning issues.

Gramenia stated clearly: "If the war continues for longer, what worries me most is the impact on inflation. If it continues for several more months, if the Strait of Hormuz is completely or partially blocked, then inflation this year could rise to more than 1%, or even reach 1.5%." He further added: "If the situation is worse and lasts longer, inflation could rise to 2.5%, which could very likely trigger stagflation, which would be bad news for the whole world."

Energy security issues are becoming increasingly prominent, and global supply chains are facing severe challenges.

Greek Finance Minister Kyriakos Pierrakakis warned that the world may be facing "the biggest energy crisis in history." He stated, "If you take other factors into account, a third of fertilizers, including sulfur, helium, and petrochemical products, pass through the Strait of Hormuz. Overall, this could pose a huge risk. Moreover, the situation in April could be more severe than in March, as the last shipment that departed on February 28th will arrive around April 20th. Therefore, the market will feel the supply tightness more acutely."

New Zealand Finance Minister Nicola Willis warned of a potential "worst-case scenario" in the event of a prolonged conflict, where crude oil is stuck in the Middle East and unable to reach Southeast Asian refineries. She stated, "In that case, our region could face shortages. We are preparing for such a worst-case scenario and anticipate that in the worst-case scenario, inflation could remain outside the target range for an extended period."

French Finance Minister Roland Lescure stated that Europe needs to increase investment in electricity to enhance the resilience of its energy markets. Speaking about France, he said, "We will invest in nuclear power and renewable energy." He emphasized, "This crisis has once again demonstrated that we need greater independence and stronger autonomy. We must view climate change as an opportunity, not a threat, and hope that we will be more secure when the next crisis comes."

At the same time, Krishna Srinivasan, head of the Asia and Pacific Department of the International Monetary Fund, urged “every country in Asia” to consider diversifying its energy supply chains to reduce dependence on a single source.

Policy formulation is shrouded in uncertainty, and central bank officials are adopting a cautious wait-and-see approach.

Policymakers generally agree that planning ahead has become extremely difficult due to persistent uncertainty.

Swedish Finance Minister Elisabeth Svantesson stated bluntly: "It is completely impossible to predict what will happen; the predictions are highly uncertain."

Olli Rehn, Governor of the Bank of Finland and a member of the European Central Bank's Governing Council, emphasized that ECB policymakers "have not pre-committed to any interest rate path," although the market has already priced in multiple rate hikes in the eurozone this year. He noted, "There is currently a lack of clarity and certainty regarding key factors, including the duration of the conflict. This largely depends on the progress of negotiations and the extent to which energy production and transportation routes are disrupted. The outlook is currently very unclear, therefore... the option of waiting and seeing is quite valuable."

Joachim Nagel, president of the German Bundesbank and a member of the European Central Bank's Governing Council, described the current situation as "very opaque and very ambiguous." The ECB's next monetary policy meeting is scheduled for two weeks later. He stated that policymakers are taking a piecemeal approach due to the daily influx of new information regarding Iran. He explained, "A lot of new developments could emerge in two weeks. Therefore, I am very cautious and unwilling to clearly indicate the next steps for monetary policy at this time."

Primoz Dolenc, Governor of the Central Bank of Slovenia and a member of the Governing Council of the European Central Bank, said the war has made "assessing what monetary policy needs to do quite difficult." He noted, "Based on our baseline scenario, we do not need to adjust our monetary policy stance because we assume this supply shock comes and goes quickly. But I don't know if this scenario is realistic. Currently, we still lack sufficiently complete information to determine what kind of monetary policy should be adopted."

Global stock markets showed some resilience, but overall uncertainty remains.

Despite the ongoing conflict with Iran, global stock markets have largely priced in the impact, with US stocks even hitting new highs last Thursday. The MSCI USA ex-US index is still down about 1% since the start of the war, but has rebounded by more than 8% in the past month.

In conclusion , this meeting of the International Monetary Fund and the World Bank fully reflects the high level of vigilance among global policymakers regarding the economic consequences of the conflict in Iran. From the potential for a protracted war to the risks of stagflation, energy security challenges, and the significant uncertainties facing policymaking, all parties agree that the current situation is fraught with uncertainty. Central banks and governments are adopting a more cautious approach in developing strategies to maintain economic stability within a complex geopolitical environment.

Future developments will depend heavily on the duration of the conflict, the actual openness of the Strait of Hormuz, and the final outcome of negotiations among the parties, all of which remain shrouded in mystery.