Chief Economists Outlook: counting the cost of the Hormuz crisis, with Maersk's Ilaria Maselli

Ilaria Maselli, Head of Macro & Market Insights, Maersk: It is around 6 million barrels per day that are missing, which is probably one of the biggest crises we have witnessed in the memory of capitalism.

Robin Pomeroy, host, Radio Davos: Welcome to Radio Davos, the podcast from the World Economic Forum that looks at the biggest challenges and how we might solve them. This week, the Forum has just published its regular Chief Economists Outlook, taking the pulse of the global economy, and everyone is trying to calculate the potential costs of the closure of the Strait of Hormuz.

Ilaria Maselli: It is the aorta of global fossil fuel trade. And we should remember that the global economy is still very much dependent on oil and gas.

Robin Pomeroy: What happens in the Gulf in the coming weeks and months may decide if the global economy can get back on track, or will fall into recession.

Ilaria Maselli: From the point that there is a stable agreement and we have a kind of time horizon until the strait opens, that confidence would be restored in the system and that would already change some dynamics in the global economy. If all of a sudden a resolution is achieved, then we can probably go back to growth without too much damage.

Robin Pomeroy: But if the situation drags on…

Ilaria Maselli: Of course, the risk of recession will rise because the effects and the cost of the war will be very, very visible everywhere.

Robin Pomeroy: This expert on macroeconomics at the shipping giant Maersk explains how economists are weighing up the risks.

Ilaria Maselli: Every day matters at this point. And the longer the conflict continues, the more we will downgrade the expectations for growth and increase the expectations for inflation.

Robin Pomeroy: I’m Robin Pomeroy at the World Economic Forum, and with a look at the global economy and the Chief Economists Outlook…

Ilaria Maselli: We are in a sort of transition phase for the global order and disruptions are in this phase probably inevitable.

Robin Pomeroy: This is Radio Davos.

Robin Pomeroy: And on today's Radio Davos, I have a co-host with me. John Letzing, hi John, how are you?

John Letzing: I'm very good, thanks Robin.

Robin Pomeroy: Remind us what you do at the World Economic Forum.

John Letzing: So I am the lead editor for economics at the Forum.

Robin Pomeroy: Economics is what we're talking about today because the World Economic Forum has just published the Chief Economists Outlook and you did an interview with a chief economist or someone who's very much involved in that world, about the state of the economy. Remind us what the Chief Economists Outlook is.

John Letzing: Yeah, that's right. She's a member of this community of chief economists at the Forum. And so the outlook is essentially a survey of these people. These are some of the some of the best and brightest among economists. It's it's a pretty significant group from the private sector, from the public sector, a lot of people whose job it is really to know what's happening in the global economy from day to day.

Robin Pomeroy: And they get surveyed by the World Economic Forum every four months or so. And the results of that survey are pulled together in this report, which is a snapshot of the global economy right now. And it's always interesting. It's amazing because we tend to do a Radio Davos episode, using an interview, for the last one four months ago, just before the Annual Meeting in Davos. Is that right?

John Letzing: That's right.

Robin Pomeroy: Okay, that was more than four months about six months ago. It's amazing how much is packed into that time. Because what that looked like then and what it looks like now is very different.

So before we listen to your interview, and you'll introduce us to who that speaker is, let's maybe go through some of the headlines from this Chief Economists Outlook which people can read right now, link in the show notes. What are the main headlines people will learn from reading this?

John Letzing: So the big headline, and as you say, that last edition seems like a long time ago because when that came out in January, what they do in this survey is they essentially ask the economist big picture, what do they see growth doing over the coming year. Back then in January a little over half, about 53%, of them said they see it weakening over the come year.

Now, fast forward to the present, the most recent edition that's just come out, 89% of the chief economists now say they see growth weakening over the coming year.

In January, one in five of these economists said they think the economy might actually strengthen over the coming year, that's fallen to about eight percent at this point.

Robin Pomeroy: And is there an elephant in the room that everyone actually is talking about? Why now? What is the big drag on economic growth?

John Letzing: Yeah, for a very good reason, a lot of this outlook is focused on what's happening in the Strait of Hormuz or what is not happening, to be more specific.

The war there has obviously just about shut things down in one of the most vital trade corridors in the world. It's about a fifth or so of hydrocarbon energy gets traded through there normally. About 120 ships or so are going through this relatively narrow strait on a daily basis in normal times. That's fallen to next to nothing.

We are at a point, I'm sure people have been reading about this a lot now, but we are really at a point where everything that got out before this has sort of gotten to where it needs to go. We're at a point now where people are really going to start realizing that they're not getting more shipments of what they need. And that includes energy, it also includes things like fertilizer as well.

Robin Pomeroy: And some economists, indeed the one you spoke to for this interview have said, in some ways this oil shock is one of the biggest we've ever known. There was an episode of Radio Davos a few weeks ago where we had someone saying that exactly. This oil shock is even bigger than the famous one in the early 1970s which had all kinds of long-term implications for the economies.

In more recent living memory, the big shock to the global economy perhaps was the COVID pandemic. Are we getting from this report an idea of how this situation now with the Strait of Hormuz and all that implies, how does it compare to the economic shock of COVID?

John Letzing: Yeah, I mean, one of the really interesting things that they did in this edition of the outlook is they set up essentially a benchmark and they said to the chief economists, look, if the economic impact of COVID-19 was 100 on a scale, how will this closure of the Strait of Hormuz, and for that matter, how will all the tariff turmoil from last year, how will they stack up against that?

Now the tariff turmoil rated at about 40. So essentially about 40% of the COVID impact from all of the tariff blitz from the U.S. last year.

Moving on to the Strait of Hormuz closure. Now, if they were asked, if this was to reopen in June, let's say, what would the relative impact be? And they said about 72 to 100. So again, if COVID-19 is 100 on that scale, reopening the strait in June would be a 72. So 72% of that impact. And, you know, I'm sure we can all remember that was not a mild impact.

Now, if the closure were to extend into the second half of this year, the chief economists were asked, now how would that rate? And they said 83.5, so nearly 84% of the economic impact of COVID. That's what we would be feeling if this closure lasts into the second half this year.

Robin Pomeroy: I mean, that's a really interesting kind of illustrative figure this, we remember COVID and what they're saying is that it's in very much the same ballpark the effect that this could have.

Let's get on and hear this interview you did then John. Introduce us to Ilaria Maselli.

John Letzing: So Ilaria is the head of macro and markets insight at Maersk. Maersk is a shipping giant that probably most people have heard of. Essentially, it's her job to function like a chief economist, to essentially know what's happening in the global economy and why it matters not only for Maersk, but for the rest of us.

Robin Pomeroy: Let's hear this interview. This is you, John Letzing, speaking to Maersk's Ilaria Maselli.

Ilaria Maselli: Hi, I'm Ilaria Maselli. I lead the macro market inside steam at Maersk.

John Letzing: So maybe just to get started, if you could help us just describe in the most basic terms what was happening in the Strait of Hormuz before all this started, before the war started, and what has been happening there since.

Ilaria Maselli: So let's get the dates right to begin with. Since February 28, the Strait of Hormuz, which is the key artery of trade and the aorta, I would say, of oil and gas trade, is effectively closed.

Now since April 8, a fragile, I would say, ceasefire is in place between the US and Iran. And since April 16, another ceasefire is in place between Israel and Lebanon.

Now these ceasefires have reduced the threats into the region, but they have left a lot of problems unresolved.

Now, prior to the start of the war, around 120 vessels would cross the Strait of Hormuz on a daily basis. And now this is on average a handful every day.

John Letzing: Okay, so some ships are getting through, but it's nowhere near what it was previously, I guess.

Ilaria Maselli: On average, less than 10 per day in the entire period, but there have been many days with none.

John Letzing: A statistic that people may have heard, we tend to hear a lot, is that previously, about a fifth of the world's energy was being transported through this relatively narrow strait. Is that right?

Ilaria Maselli: Around 25% of global seaborne oil trade and 20% of LNG exports used to pass through the Strait of Hormuz prior to the war.

John Letzing: A ceasefire has been in place for a while now, so why does that mean that the strait can't simply be used as it was before? I mean, how do you explain that to people?

Ilaria Maselli: So the ceasefire has ceased hostilities, but it doesn't mean that the strait can be fully utilized again.

So first of all, there have been several reports of vessels being attacked while attempting to transit. So that's a first concern.

And also Iran has warned that sea mines have been deployed in the strait.

And when it comes to Maersk, the very first consideration is safety. Is passage safe for our colleagues, our crews? Is it safe for the vessels? And this is true in every situation and very much true in this one.

Now, on top of that, we should keep in mind that there are two sets of controls in place. One is on the Iran side. So authorities are reportedly requesting cooperation and transit-related payments for vessels that are crossing the strait.

Now we should keep in mind that there are sanctions on Iran and especially on entities linked to the IRGC. So any payment to Iran authorities could expose ship owners, insurers and banks to sanction risk. So that's one concern.

And then we should also remember that there is a US blockade also in place and the the CENTCOM, US Central Command reported on May 19 that it had diverted 89 commercial vessels going into Iran and it had disabled four.

So there is a lot of barriers I would say to the transit and then of course there is the issue of insurance which needs to be available and at a reasonable price to restore the flows.

So a lot needs to in place before navigation can restart on a normal level.

John Letzing: Competing blockades. Let's say a ship navigates the Iranian version. That could create some serious issues. And then, of course, then you have another potential issue to deal with as you try to proceed through the US blockade, it sounds like.

Now, if we can maybe take a step back a little bit and talk about this particular strait. I mean, this is a very relatively narrow body of water. How is it that this relatively narrow passage became so important for global trade?

Ilaria Maselli: Well, as I said, it is the aorta of global fossil fuel trade. And we should remember that the global economy is still very much dependent on oil and gas,It is, of course, less dependent now than it used to be in the past. But still, a lot of output in the global economy is dependent on fossil fuel.

There was some time ago an interesting blog from the World Bank where they tried to measure the oil intensity of the global economy and they say that back in the 70s one unit of GDP. It relied on 0.12 tons of oil equivalent, and this number has now been reduced to 0.05. We are a lot less dependent on oil of course than a few crises ago but still it is still an important input into the world economy.

Just a couple of days ago the International Energy Agency published a report where they tried to understand okay We're now sitting 80 days into this war. What is the size of the gap between demand and supply of oil? And they estimate, I think you too, it is around 6 million barrels per day that are missing,
which is probably one of the biggest crises we have witnessed in the memory of capitalism.

John Letzing: Ilaria, help us understand, if this is such an effective pressure point that can be applied and really screw a lot of things up for a lot people, why has no one done this before, or have they?

Ilaria Maselli: That's a very good question, John.

If we think back, actually, navigation in the last decades has been broadly safe. And freedom of navigation is actually a core principle of maritime law.

So there is only a couple of breaches besides until this war started. And that's some of these piracy acts. And the attacks of the Houthia against commercial vessels in Bab el Mandeb.

Now I find this one particularly interesting because many people don't realize that since the start of 2024 most container vessels do not transit through the Red Sea because of these attacks. It is not considered safe to approach Bab-el-Mandeb and cross the Red sea.

John Letzing: Because of the Houthi attacks.

Ilaria Maselli: Because of the attacks against commercial vessels from the Houthis.

And so what is happening is that most most container vessels that are going for example from Asia to Europe are currently circumnavigating Africa, which adds around 20 days on a round trip from Asia to the north of Europe for example.

Now nobody has seen empty shelves, the industry has fully adjusted and accommodated this necessity. And this has gone largely unchanged, but it basically means that the current closure of Hormuz is actually the second key strait that is closed. And these two examples are interesting because one shows, like in the case of Bab-el-Mandeb, that rerouting is possible. But in the Strait of Hormuz, there is no alternative. So even though we have a lot of technology and resources in our modern economy, trade is still not fully decoupled from geography.

John Letzing: I mean, it sounds like we all sort of operate on this or usually operate on this basic understanding that these things need to be kept open at all costs in order to keep the global economy functioning.

Ilaria Maselli: Yeah, there's actually a UN Convention that disciplines that was signed in 1982, it's normally called the Law of the Sea, it states, among other things, that the straits should be free for navigation.

And what we see now is that Iran, who is funnily enough one of the countries that signed it but didn't ratify it, is challenging this idea of neutral and rule-based maritime order that has gone quite well, I would say, until recently.

John Letzing: And we've talked about oil and gas, but there are many, many other things that transit this strait, right? I mean, what are some of the other things that the global economy is essentially being starved of at this point?

Ilaria Maselli: I'll probably start on the import side, because of course the fact that there is these restrictions to navigation means that a lot of things are not reaching the Middle East area.

I look at data for container trade, which I'm more familiar with, there is, I'm looking at 2025 data, the normal times data, in 2025 goods like fast-moving consumer goods or refrigerated products accounted for around 22% of all containerized imports into the region. And then there is also, of course, other things like automotive and chemical goods that are also big categories of imports for this region.

Now, in March, imports into the Middle East contracted 40% compared to March of 2025, so big, big contraction and this is because of course these big ports like Jebel Ali in Dubai or Doha in Qatar that are inside the Gulf cannot be reached and these are huge ports at the forefront of logistics operations, competitive very much globally.

So now there are other point of entries that have been leveraged to make sure that some of these goods can reach the area. Like Jeddah, for example, on the west coast in Saudi Arabia, like Salalah in Oman or Khor Fakkan in the UAE. So these have become a bit the hubs to make sure that goods can enter the region and to some extent exit the region as well.

So, on the export side, again, if I look at containerized goods, a lot of primary plastics are a key export, in general, chemical exports are around half of the region's exports. And then also another big category is aluminum.

The contraction in March of these exports, of exports out of the Middle East was similar to imports. So we're talking about 46% contraction year-on-year.

And of course there's a lot of non-containerized exports that get out and we have heard a lot in the last days about fertilizers and helium of course that is a key for the AI supply chains. So of course this is not a regional crisis, of course it's very hot in the region but of course supply chains ripple effects will spread it to the rest of the world.

John Letzing: I thought this particular part of the chief economist outlook was very interesting where the chief economists were basically asked to kind of benchmark the potential severity of this blockage of the Strait of Hormuz. And the benchmark used is COVID-19, the pandemic.

And so, in the outlook, where the relative severity of the impact of COVID-19 scores as a 100, for example, if the Strait of Hormuz was to be reopened this month, let's say, being May, that would score a 55. So it would still be more than half of the relative impact of COVID if it were to open, let say, tomorrow.

If the closure was to last into the second half of this year or longer, that increases to almost 84. So essentially 84% of the relative severity of COVID-19, the impact of COVID 19 on the economy would be experienced according to this survey.

Do you generally agree with that? Is that, does that line up with sort of your own expectations at this point?

Ilaria Maselli: It's hard to give a very precise answer, but I think there is a sort of consensus that is building around the idea that if no solution is found in Q2, then of course the reserves of oil and derivatives will start to shrink to uncomfortable levels and at that point oil and gas prices will increase again and the shortages will spread.

I think when we reach that point, three things will happen. Of course, the risk of recession will rise because the the effects and the cost of the war will be very, very visible everywhere.

Then we might see some sort of second and third order effects that will start to materialize. I think that was very hard at the beginning of Covid to imagine all the things that happen afterwards, like the congestion or the boom in the consumption of goods that followed or the inflation and the duration of inflation.

So there was a lot that was difficult to anticipate at the moment that the pandemic started and I think you know I'm trying to think like okay what is it what how should we imagine the second and third order effects. What is it that is difficult at this moment to think about and some things I can think about is some sort of balance of payment problems in emerging countries.

I mean, we've seen there is a lot of concern in emerging Asian countries around this.

Maybe some liquidity crisis, maybe some turbulences in the transportation system. Some other effects could concern production like chemical goods that are very energy intensive that might struggle in some parts of the world.

But I think something else will happen and that is that everyone, every household, every company, every government will start to become extremely creative and experiment with solutions that we all thought were impossible just three months ago.

And I think, you know, economies tend to underestimate the resilience of mankind and the creativity of mankind when problems like, when shocks of this size emerge.

So let's see if we will go there and witness this new range of creative solutions.

John Letzing: Is it as simple as simply getting everything that's sitting there in the Gulf now out to where it needs to go, and then everything is fine? Or what are the knock-on effects that are going to roll through the system that need to be fully played out, I guess, in terms of fully course correcting at this point?

Ilaria Maselli: I think, of course, as I said, the ceasefire is not enough. There is a lot of physical barriers and risks that are there that are preventing any change at this moment.

So the first step would probably be a stable and convincing peace agreement. That would be a turning point.

The other issue is, of, course, the demining operations. Honestly we don't know how long it takes and how this will proceed. Maybe the only reference point we have is a report from the U.S. Defense Department to the Congress that argues that it can take six months to demine the strait.

So that's another step that would have to happen. And I think after that. And to be clear.

John Letzing: No one's going through until that happens. Is that fair to say? I mean in significant numbers

Ilaria Maselli: That's not certain in the sense that I think the Iranian authorities have designed a route for some of the vessels that have crossed that kind of avoids these mines.

But of course it is a risky passage until the mining operations are completed and especially if thinking of normal flows, which, as I said, count 120 ships crossing every day and not one or two.

So that is something that needs to happen and then I guess from there flows would resume gradually but as I said it is a lot of steps until until we get there but I'm sure that if we reach the point actually confidence would again rise.

We've seen as a very first reaction since the start of the war, consumer confidence declining, business confidence declining. So from the point that there is a stable agreement and we have a kind of time horizon until the straight opens that confidence would be restored in the system and that would already change some dynamics in the global economy.

John Letzing: Maybe just to reiterate, at this point, according to this latest chief economists outlook, 89% of the chief economists surveyed see weakened global growth over the coming year as a result of this. Fully a fifth, a bit more than a fifth see it severely weakened over the coming year. So it sounds like, I don't want to put words in your mouth, but it sounds like you're roughly in line with that assessment.

Ilaria Maselli: Yeah, of course. I mean, the longer I mean we're probably at a turning point in these very days. So if if all of a sudden a resolution is achieved, then we can probably forget about this and go back to to growth without too much damage.

But of course, every day matters, I think, at this point. And the longer the conflict continues, the more we will downgrade the expectations for growth and increase the expectation for inflation around the world.

John Letzing: Speaking of inflation, also in the chief economist outlook, overwhelmingly, more than 90%, well over 90% of the chief economists expect increased inflationary pressure over the coming year as a result of this supply shock for the ages. Are you in agreement with that? And maybe help our listeners understand a little bit why it is that economists and a lot of other people get very nervous when the topic of inflation and an intense inflationary cycle comes up. I mean, what are some of the potential negative impacts, knock-on effects of that socially and otherwise?

Ilaria Maselli: Energy prices, of course, play a very important role in inflation figures. And we've seen them rising, actually, very fast. Already, if you follow a bit the euro area Inflation number, or the US CPI, then you can see that there's been a change very fast, already March and April figures, inflation has gone up. And the channel for that is the higher energy cost. Oil and gas are more expensive now than they were prior. They're pretty low actually going into this war.

So that's the first channel. Then you can think that the longer energy prices remain high, then the more they will go not only from affecting inflation through the energy cost, but they also will go into core inflation. So. Energy is an input in a lot of processes and so everything all of a sudden becomes more expensive producing goods, transportation and so other items of the inflation global total inflation number starts to become affected.

This of course first and foremost is is like a big tax. It just makes everyone poorer. Higher prices mean that households will have a lower disposable income because wages don't adjust immediately and we don't know if they will adjust in the future either. So that is the very first concern. Disposable income of households will be affected by higher energy prices.

Then the other channel of concern is inflation expectations. So, the fact that we have higher inflation in April, and I'm sure we will have in May once we get the figures, does it mean that I'm changing my expectations about long-term inflation?

And this is very important for central banks who are in charge of keeping an anchor around central bank, around inflation expectations.

So central banks are definitely looking at core inflation especially will look at how wages adjust to that and how long basically this shock will impact inflation.

And inflation is a key target of course of central banks and the main target for some central banks like in the European Central Bank. There will be a lot of discussions around, okay, in this new environment where there is potentially less growth and more inflation, what is the best course for monetary policy, so for interest rates in the first place. So the expectations we were expecting prior to the war, a stable environment for interest rates and a reduction maybe in the US for example. This is no longer the case. Expectations have changed around interest rate policy and then this is of course interest rates are a key variable in economic growth and investment decisions and so forth.

John Letzing: Yeah, I mean, to help people understand this a little bit. If we were in fact looking forward to stable rates or even rate cuts going into this conflict, I mean those are good times for an economy, right? I mean that means things get revved up, it's more money in the system, more money flowing around, more ability to simply buy things and invest in things and now it sounds like that is effectively off the table for the time being.

Ilaria Maselli: Yes.

John Letzing: In terms of alternatives, potentially for the Strait of Hormuz, I mean, are there any realistic alternatives out there and, you know, what are we talking about potentially in terms of investment to actually create viable alternatives?

Ilaria Maselli: Let's start with the geography of the area. If you look, if you open a map, you can see that alternatives are not there physically. So what my colleagues in the region have done is to... Start shipping more and more goods to other ports. Jeddah is very important at this moment, Salalah, Inaman, Khorfakan, and then build the so-called land bridges. So truck the distance from these ports to reach the rest of Saudi Arabia, Kuwait, Bahrain, Qatar, Iraq.

This is of course a very difficult operation, you have to imagine when a big vessel arrives in a port it can have 20,000 containers and each container goes on one truck. So you need a lot of trucks to replace the agility of normal port operations in the So, these alternatives don't exist physically, one-on-one in terms of replacement.

Now, if we are thinking more around oil, I'm not an expert, but my understanding is that it's very difficult to ramp up production elsewhere. I understand that, for example, the US will export more this year than expected, but we're talking about hundreds of thousands of barrels, not huge amounts that can by far not compensate for this.

And then probably something that is being discussed at this moment is also building more pipelines. But that is something else, of course, that doesn't happen within weeks. And it's especially difficult to do in the time of a conflict.

John Letzing: Maybe not cheap either.

Ilaria Maselli: And not cheap, and not cheap either.

So yes, very difficult to find quick solutions. And that's why I think the expectation is that in the short term, if the crisis continues, we will have to live with this gap between demand and supply of fossil fuels and hence the fairly grim expectations among chief economists around what that will mean for growth and inflation.

John Letzing: What you're saying, essentially, is that whatever shape this Strait of Hormuz comes into, whatever the resolution is, whatever that looks like, in the end, the global economy is going to have to deal with that, as opposed to imagining that this whole new set of infrastructure is going to appear, and then we can just not rely on the strait anymore.

Ilaria Maselli: Difficult to imagine at this moment and I guess that is why we're all following very closely the developments on an hourly basis since February 28th.

But I think there is something interesting happening with trade. All of a sudden, there is a lot of discussion around these choke points.

The Strait of Horuz is not the only trade that is very important. There are several out there. And probably two that are, if I look at the map, are calling my attention.

One is Panama. I'm not the one that is looking at Panama. Definitely the U.S. Administration is. Has become very sensitive lately about who operates the canal and the terminals there.

So this is per se interesting, but there is also an alarm raised by scientists about El Nino this year, which could create a risk of low water on the canal. And this happened already in recent times, in 2023 there was another season where the levels were low and so fewer ships could pass. So it is possible to go around Panama. It has been done also in 2023 for example when the water was low but of course you know you start to you know put a map in front of you and say okay this one there we cannot pass there we can't pass, this is problematic, lower ship so this is this is another another strait that calls for attention.

John Letzing: Yeah, no, that's a great point because people are obviously thinking of one particular risk now, conflict, war. But the climate change presents its own set of challenges, it sounds like.

Just to help people understand a little bit in terms of relative. Significance, you know, the Strait of Hormuz relative to the Panama Canal. I mean, if we did see a disruption in the Panama canal, I mean how would that sort of measure up to to what we've been seeing recently in the Strait of Hormuz?

Ilaria Maselli: It's not as disruptive, as I said, because there is possibility to go around it. So it's less disruptive in a way. But of course, every time you have to find new routes, new ways, there is capacity constraints at some point that can be hit.

If you start closing more than one strait that, you know, when you sum it up, it can become problematic to deal with.

John Letzing: We all, well, most of us anyway, probably remember the supply chain issues that emerged during COVID, speaking of COVID. Is this a case where we sort of forgot those lessons or was real progress made after those big disruptions that have gotten us, actually gotten us to a better place than we were before?

Ilaria Maselli: So I think the world has not forgotten about it. But in the world we live in today, I think the view around trade and supply chains has changed.

So for a long time, they were mostly a tool for economic growth. And now they are rather a tool for foreign policy and security policy. And this is also the result of all the changes that have happened in the last decades with globalization that has created niches of specialization in the global economy so everyone does what they're best at and they purchase the rest but this has also created winners and losers and especially in within western countries.

And there is also the fact that the forces of globalization themselves have in a way planted the seed of the future change. There is a lot of investment that went into China, that went to Southeast Asia, and this has turned the region a bit into the factory of the world.

Now, fast forward to 2026, we are in a sort of transition phase for the global order and disruptions are at in this phase probably inevitable. You know there is this very nice quote from an Italian intellectual I came across again a year ago from Antonio Gramsci and I think it translates something like, the old world is dying the new world is struggling to be born so now is the time for monsters and you know it's for monsters yes it's stuck with me because this is really a transition phase of for the for the global order.

John Letzing: Yes, yes, very well said, okay. Is there anything beyond what we've sort of been discussing here relative to the Strait of Hormuz and Choke Points, is there anything else about the global economy in general that's kind of top of mind for you these days?

Ilaria Maselli: Well, several things, I have to say. Of course, I'm following on an hourly basis the development of the conflict in the Middle East, but there is a lot that is happening and we should not forget that this is not the only war at this moment in the world, unfortunately.

There is climate change. The fact that we're not talking about doesn't mean that it's not gonna happen, it's happening already. So El Nino could be another important source of struggles in some parts of the world and so we talked about the risk of low water in the Panama Canal but it could also exacerbate the problems that are now being generated by the fact that there is less fertilizers being traded and prolong in a way the shock for the agricultural sector in some countries. I'm thinking of India for example.

U.S. Tariffs, we have a deadline looming.

John Letzing: Can't forget tariffs.

Ilaria Maselli: Yes, can't forget that. I cannot forget Thais for sure. For sure. There is, in July, the 10% tariffs on all U.S. Imports will expire. The one that followed the IEBA ruling of the Supreme Court. And there will be new tariffs in place, but we still don't know much about, you know, on which sectors, on which countries, how high. So there is still a lot of uncertainty on this topic.

And still on the US. On US there is the USMCA renegotiation looming also during summer and I think it's interesting there how Mexico and Canada have positioned themselves in a very different way. Mexico has done its best to align itself to the trade policy of the US and Canada is in a different position, is more in a clashing position with the US, so let's see what happens with that negotiation.

Then there is a lot happening in the field of trade policy also outside the US. There is, of course, concern of protectionism spreading further against China because we've seen Chinese exports incredibly strong in the last three years, possibly crowding out experts from other places or even domestic production in some countries. So that's definitely becoming a sensitive topic in many capitals.

But at the same time, what I find super interesting is how trade agreements that were impossible, like EU-Mercosur or EU-India, have all of a sudden been signed. So there is a lot happening in the field of trade policy in both directions.

There is new dynamism. I think Brussels, the EU and India are a bit in the center of it. So let's see once the dust settles where the balance is between these two forces at play.

In general, I think if I take another step back and look at the outlook, there are these three forces at play in the economy right now.

There is definitely, of course, the energy shock we discussed at length. There is also this AI investment boom that keeps fueling growth in the US and in a lot of countries in Asia, like Korea, like Taiwan, for example. And then there is a lot of fiscal support in the economy that is there. Under, as a floor, the deficit. In the U.S. Last year, the fiscal deficit was 6% of GDP, we're talking about 6% or huge GDP, so a lot of support for the economy and close to 3% in the euro area also. So I wonder where the balance will be between these three forces, between the oil shock, the AI investment and the fiscal support.

John Letzing: Ilaria Maselli. Thanks so much for joining us.

Ilaria Maselli: Thank you for having me.

Robin Pomeroy: Ilaria Maselli of Maersk was speaking to John Letzing.

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This episode of Radio Davos was written and presented by me, Robin Pomeroy. Studio production was by Taz Kelleher. Radio Davos will be back next week, but for now, thanks to you for listening and goodbye.