D (3:49)

I want to bounce off what you were just saying about the war and its effect on the global economy, because even a long war, would that have a limited consequence for global GDP or will there be longer term damage done?

B (4:04)

A lot depends upon how long oil prices stay high. Right. It had come down to around 85 yesterday and now then it shot back up to 100 and now hovering around 96. So coming into 2026, the assumption was that 2026 would be a year when oil prices would average $65 a barrel. Right. I think in the best case scenario, we are looking at it averaging now $75 a barrel, which just from the oil channel shaves off about 0.1 to 0.2 percentage point global growth. But if this continues, and I don't think this requires, we're not talking necessarily that everything gets sorted out in a week, but if this continues well past a few weeks and we're looking at now average for the year hitting 85, that's beginning to shave off like 0.3 percentage point global growth, 0.4 percentage point and global inflation starts going up by 50 basis points, 60 basis points. This needs a solution relatively soon. Otherwise we're all looking at countries around the world dealing with many countries dealing with stagflationary shocks.

D (5:12)

What about emerging economies? They would be vulnerable here to persistent high energy prices. Right.

B (5:21)

Emerging markets have, especially the ones of course that are importers. I mean, other countries who are exporters benefit from the higher oil prices. But the ones that are importers, and these include India, many of the East Asian economies. Of course, China also is a big importer of energy, though they have big strategic reserves. So they're kind of a Little more insulated, but yes. So they tend, they tend to be importers. They also are much more energy dependent. Their economic output is much more energy dependent than the rich nations of the world are. And we've also seen the dollar appreciate. So it's a combination of oil prices going up and the dollar appreciating and that's leading to really scarcity. I mean we're seeing rationing in many emerging countries around the world. It's not just you can simply pass through very high oil prices.

C (6:10)

An exceptional day for Bloomberg Surveillance. Edward Morse was with us earlier. Charles Kantor of Neuberger Berman as well in our honored with Geeta Copenhagen. With us, the former International Monetary Fund deputy managing director holding court at Harvard Economics after her sojourn of public service. Geeta, I look at where we are and my answer is currency is the litmus paper of the system. Are the traditional dynamics of foreign exchange in play now or is there a new regime we have to get used to?

B (6:45)

I think this episode has told us that the traditional regime sustains. There have been a lot of questions about the dollar's dominance and whether we've seen some sort of financial decision making shift sufficiently in the world that things are going to behave differently. But what we saw right at the onset of the war when there was a huge spike in uncertainty was that the dollar strengthened relative to pretty much all other currencies in the world capital flows. Two emerging markets didn't. You didn't see a whole scale reversal, but you saw lesser flows going into emerging markets and their currencies depreciated. The US stock market held up better than other countries also because frankly US being a bigger net energy exporter makes it less of a slight creationary shock for the US than for many other countries in the world.

C (7:34)

Dr. Gopinath, I think of my great mentor at LSC, Magden Desai, who we lost recently. The work of Raghurajan at Chicago and your work as well on India is a balance and fulcrum point between all these global tensions. Is there a new India now or is it a traditional relationship of India with China, with Russia and with America?

B (8:01)

I think the word is complicated. It's really complicated at this point in time. The good news is that India's economy is growing strongly from internal demand and from internal sources that's pushing growth. The build out in infrastructure, the digital payment system. There is good growth momentum coming from within India. What they have had to do, which I think is actually a positive over the last year, is to go out and make more trade deals with other countries. They just did that with the European Union, but they also did that previously with the UK I think that's a good thing. I think it helps for the, for India to bring its tariff rate down and they're going to have to keep this up. It's a complicated world. It's people are unsure about who their friends are and for how long.

C (8:49)

Right now, a second headline coming out of Iran. This is from some form of Iran tv. This is published on the Bloomberg it's not speculation. Quote, iran says it began new wave of missile launches on Israel buttressed up against the headline of about 20 years ago, Brent crude $98.32. Alexis Christopher is with Giddy Gopinath of Harvard.

D (9:10)

So, Gita, what about the beneficiaries or the winners? And I guess I hate to use the word winners in war because I don't think there are any winners in war. But when you're talking about large net energy exporters outside the Gulf, are they going to be benefiting? And I'm thinking Norway, you know, Russia, of course, Canada.

B (9:29)

Yes, certainly these, absolutely. These countries benefit from oil being at $100 a barrel. That's a huge windfall that, you know, it's very helpful. And I would say for Russia right now, this is great because they could really use the money that they're getting from their oil sales. When oil was at $65 a barrel, it was getting really hard for their economy and you could see the strains. And $100 a barrel helps them now. That said, if this now morphs into a more broader financial crisis because of growth dropping everywhere, inflation going up, we're already, it's kind of clear we're moving into a much more tighter monetary policy stance everywhere in the world relative to what it would have been in the absence of this massive oil price shock. You know, that combination is never good for, for it, for the world as a whole, for pretty much all countries.

C (10:26)

Can I do an audible?

D (10:27)

Please do.

C (10:27)

I'm going to do a terrible Tom Keene audible with Gita Gopinath. So we're on stage in Marrakesh and there's like planes flying over. It's a tent. There's like 800,000 people in there. And you know, Gita's there. I think, I can't remember the details. I think substituting for the managing director because she had to go see the king of Morocco, whatever, and Christine Lagarde there and a bunch of other worthies. And I never got this question into Geeta Gopinath we'll do it now. So we're going to do it right now. Geeta Gopinath, you came out of Princeton, holding court at Harvard. Ken Rogoff and Bernanke did part of your PhD. I want you to explain the impact of the Nobel Laureate Claudia Goldin on economics. You and I never got to talk about this. We're going to do it this morning. Tell me what professor golden did in labor economics, in our behavior, in our society that was so important.

B (11:25)

Claudia, who won the Nobel Prize for her work recently and was long overdue, basically told, brought us. I'm sorry, brought us gender economics, which is to basically point out that there are salient differences between how women and men participate in the labor force, what they get paid, why they get paid differently, the importance of family and child rearing, which has an impact on women. And it's hugely important because for multiple reasons, besides the fact that we all want to live in a society where you get rewarded for your skills and talents at a fair level. We're in a situation where worldwide fertility rates have come down, and you cannot fix that problem without recognizing that it is tied to how women engage with the labor force and what it takes. And if by having a child, you are restricted and that impedes you, because you get very little support from your partner to be able to engage in work, the incentives to do that get dampened. So, you know, it's the. Her contributions have been tremendous. And Tom, I think we have to keep in mind that for a long time it was not cool to be working on gender issues. When I say long term is when Claudia was much younger. At that time, as an economist, you wanted to be working on monetary policy, macro policy. Those were the topics to focus on. So for Claudia to go against the wind and say, no, I'm actually going to work about gender and women in the workplace. That was a huge, you know, stepping out of line. And kudos to her for that.

C (13:18)

One quick question. Gee, to go, Banath. We got to go with Iran and the news. But I have to ask, are you letting your students use AI? Is AI a constructive tool in the classroom?

B (13:30)

Yes. Right now I'm teaching a class to PhD students, and I think that they should absolutely use AI in a particular way. But at the same time, I want to make sure that they're also developing their own cognitive skills. I think the risk is that we're going to outsource everything to a smarter, smarter friend and in the end, not learn anything. So we have to strike the balance right 100% agree.

C (13:53)

Thank you so much for that. Professor Gopinath at Harvard University for public service for India in America, noted at the International Monetary Fund.