Gita Gopinath warns next 24 hours could decide how hard West Asia war hits India and the world

IMF’s former deputy managing director flags risks to growth, inflation and energy supply as conflict escalates

• West Asia conflict's economic impact may clarify in 24 hours
• India faces high exposure via imports, exports, and remittances
• $100 oil may trim global growth by about 0.5–0.6 points

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The direction of the ongoing West Asia conflict and its economic consequences could become clearer within the next 24 hours, Gita Gopinath, economist and former Deputy Managing Director of the International Monetary Fund (IMF), said in an interview with CNBC-TV18.

“I think we're in a very troubling place at the moment, and it's really hard to tell which direction the war is going to take,” Gopinath said. She added that the situation remains in a 'wait-and-see mode' after US President Donald Trump issued an ultimatum to Iran to reopen the Strait of Hormuz, while Iran responded by warning it could target additional facilities.

Gopinath said these developments make the immediate outlook critical for both the trajectory of the conflict and the global economy.

She flagged India as one of the countries most exposed to the fallout. “India, through multiple channels, both through imports, exports, and remittances,” is vulnerable, she said, adding that this exposure is already visible in pressure on the rupee.

Oil at $100 vs market expectations

Gopinath said current market expectations appear to be built around oil averaging about $80 per barrel over the next 12 months.

At that level, she said, global growth could be reduced by around 0.2 to 0.3 percentage points.

However, if oil were to average $100 per barrel for the rest of the year, the impact would be significantly larger. “Then we're talking about shaving off closer to 0.5, 0.6 percentage points from global growth,” she said, describing the effect as meaningful relative to a baseline of 3.3 percent global growth.

She added that global inflation could rise by 80 to 100 basis points under such a scenario.

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Gopinath also noted that financial markets have not fully priced in a more severe disruption. She said US equity markets have declined by about 6 percent to 7 percent cumulatively since the start of the war, which she described as modest compared to a scenario where oil averages $120 per barrel.

Infrastructure risks beyond Iran’s supply

Gopinath said Iran’s direct oil supply accounts for only about 1 percent to 2 percent of global output, limiting its standalone impact.

Instead, she identified the larger risk as potential damage to energy infrastructure in key Gulf producers such as Saudi Arabia, Qatar and the United Arab Emirates.

“The question is, what happens to energy infrastructure over the next few weeks?” she said, adding that disruptions could affect not just crude oil but also natural gas, liquefied natural gas (LNG), and liquefied petroleum gas (LPG).

She warned that such disruptions could lead to shortages of essential fuels, including in India.

“This is quite unique… because it's not just that oil prices are high, but we are seeing shortages of essential fuels around the world,” Gopinath said.

Implications for import-dependent economies

Gopinath said economies in Asia and Europe that rely on energy imports from the Middle East would face growth and inflation pressures if supplies are disrupted.

She did not quantify country-specific impacts but said the combination of higher prices and potential shortages would have negative consequences for growth and inflation.

Policy response: targeted support and communication

On policy response, Gopinath cautioned against broad-based fiscal measures.

“I think what we have to keep in mind is that any kind of government support should be done on a targeted basis,” she said, citing limited fiscal space.

She said support should focus on vulnerable households and sectors on the production side of the economy.

Gopinath also emphasised the role of central banks in anchoring inflation expectations through clear communication to maintain domestic economic stability.