The countdown is on: The global economy has four weeks, eight at most, if it is to avoid plunging into a recession.
That’s the warning from Mohamed El-Erian, the former CEO of Pimco, who served as chair of President Obama’s Global Development Council. This week, El-Erian said the globe will “avoid a recession, provided—and here’s the important thing—provided the straits are reopened in the next four to eight weeks. If they’re not reopened in the next four to eight weeks, it will look very different.”
El-Erian’s focus on the strait is the same as the rest of the world’s: wondering when the global oil supply will return to normal, easing prices as a result. But El-Erian is one of the few who has stepped further, by placing a time frame on when the discomfort may dip into a full economic contraction.
On the question of when the strait might reopen, there’s little evidence of a swift resolution. It’s worth remembering that when the conflict between Iran, the U.S., and Israel broke out, Wall Street was widely of the opinion that it would be resolved in a matter of weeks. Instead, the standoff has rumbled into a third month, with Iran (which borders the Strait of Hormuz) threatening ships that pass through the waterway, suffocating oil supply out of the vital Middle East region.
