Nobel Laureate Economist Does Not See 2008-Style Global Financial Crisis Due to Middle East Conflict

Kathmandu. Nobel laureate and French economist Philippe Aghion stated on Monday that the ongoing war in the Middle East is unlikely to trigger a global financial crisis similar to that of 2008.

"If the war lasts for a long time (many weeks), the price of oil will exceed $150 per barrel, which will significantly increase inflation and lead to a situation like the 1973 oil crisis," Aghion told RTL radio.

"I see a potential recession but not a collapse. For example, I do not see a possibility like the 2008 financial crisis," he said. In the 1973 Yom Kippur War, oil prices rose dramatically due to the oil embargo imposed by OPEC, the organization of Arab oil-exporting members, on nations supporting Israel, leading to increased inflation and economic stagnation.

"For such a shock, policy-making and response will need to be coordinated among European countries, the United States, and other developed nations," he added.

G7 finance ministers are expected to discuss releasing strategic oil reserves on Monday to calm markets. "A long and widespread conflict will reduce global growth," said Aghion, who received the 2025 Nobel Prize in Economics for his work on sustainable growth through creative destruction.

The 2008 global financial crisis was caused by the collapse of the US real estate market.