Central bankers, politicians warn of global risks as Iran war drags on

Policymakers around the world are closely watching developments in the Middle East as they gauge the most prudent response to the economic fallout of the war.

CNBC spoke to more than 30 central bankers, politicians and policymakers at the IMF World Bank meetings in Washington, DC, this week, who weighed in on the U.S.-Iran war and their biggest economic concerns.

The interviews came before Iran’s Friday declaration that the Strait of Hormuz is completely open to commercial traffic during the ceasefire between Israel and Lebanon.

U.S. President Donald Trump on Friday thanked Iran for opening the strait in a social media post. But Trump said the U.S. naval blockade of Iran’s ports will remain in effect until an agreement is reached with Tehran.

Overnight, Trump said at an event in Las Vegas that the war “should be ending pretty soon.”

On April 1, the president said he expected the war to last another two to three weeks. Since then, there has been mixed messaging out of Washington and Tehran, and little clarity on the status of peace talks.

“I’m being asked all the time now, is this war going to have a lot of impact? The first answer is, it has already had an impact,” Pierre Gramegna, managing director of the European Stability Mechanism, told CNBC’s Karen Tso on the sidelines of the IMF World Bank meetings. “I mean, look at inflation rates in the last months. Look at what’s going on in our gas stations all over the world. The impact is obvious.”

Quoting the Colombian writer Gabriel García Márquez, Gramegna’s answer to whether the war and its impact will last was “it is easier to start a war than to end a war.”

“To start a war, you don’t need to ask anybody, you’re on your own. But to end it you need to agree, bilaterally, multilaterally, and this uncertainty is weighing, obviously, on how we look at the future.”

On Thursday, as the conflict neared its eighth week, Trump said Washington and Tehran were close to making a deal.

Bank of France Governor François Villeroy de Galhau told CNBC, however, that policymakers “cannot bet only on the most favorable scenario.”

“There is unprecedented uncertainty, even unknown,” he said. “[The war] could be prolonged, there could be secondary effects, not only on energy, but also on some other products. So in our case, we expect higher inflation and we expect lower growth.”

Elisabeth Svantesson, finance minister of Sweden, warned that “we haven’t seen all the facts of this crisis yet, [and] it could be pretty bad.”

“It depends on, of course, the intensity and duration of the war, but it affects people around the world,” she said. “Everyone is affected in one way or another, so I guess global demand will be lower, and so will growth.”