Those reserves have now been largely depleted, meaning countries will have less room to maneuver in the event of renewed conflict, Gorncha told Reuters, in an interview before leaving the IMF to return to the University of California at Berkeley next week.
Gorncha did not provide any details about the new forecasts that the International Monetary Fund will issue on July 8 after his return to academia, and he has long warned that increasing geopolitical tension could lead to further division in the global economy.
This is the second time during its term that the Fund has chosen to abandon basic expectations, and the first time was in April 2025 after US President Donald Trump caused disruption in global trade by imposing customs duties on imports from most countries in the world.
Fund spokeswoman Julie Kozak on Thursday left the door open as to whether the fund would continue to present the three growth scenarios or return to traditional baseline projections.
Last month, as the Strait of Hormuz continued to be closed and global crude oil prices rose above $100 a barrel, she said that the global economy was moving from the most optimistic “benchmark forecast,” which assumed a quick end to the conflict and 3.1% growth in 2026, to a “pessimistic scenario” with 2.5% growth.
In 2025 and 2026, there were not enough historical precedents to make reliable baseline forecasts, Gorncha said, meaning economists should “be humble” and refrain from base forecasts, resorting instead to a range of expected outcomes in specific scenarios. But these cases should be rare.
He added, “We do not want to repeat this often,” but he acknowledged that the state of uncertainty and risks are still high.
He said that the rapid withdrawal of strategic reserves and production changes by refining companies contributed to avoiding sharp rises in oil prices, as only 3% of global oil was withdrawn from the market instead of between 10% and 15% as initially expected.
But risks are likely to rise, and countries’ oil reserves will decrease to mitigate any further declines in supplies in the event of a collapse of the ceasefire and the return of hostilities.
On Friday, Trump held Iran responsible for the attack on a ship near the Sultanate of Oman, considering it a violation of the ceasefire, which highlights the fragility of the initial agreement to end the war with Iran.
Shifts in trade relations and agreements without the United States
Gorncha said that global trade flows and relations are witnessing a clear shift in the wake of Trump’s tariffs, noting that the European Union has concluded trade agreements with Latin America and India after decades of negotiations.
He added: “Suddenly, in less than a year, the two agreements were signed. This is not a coincidence. The deepening of trade relations with other countries cannot be overlooked,” noting that a number of these emerging trade agreements do not include the United States.
At the same time, he pointed out that the effectiveness of tariffs and other economic sanctions is generally limited, without specifically mentioning the accelerating pace of Trump’s resort to tariffs in dealing with a wide range of political disputes.
“There is a view that having these kinds of choke points or this decisive control is critical, but I think what we are seeing is how quickly the global economy is trying to find ways around them,” Gornsha said.
He added: “Indeed, you have influence in the short term, and then there is a reaction from the actors on the other side. They are not passive, but rather find ways either to circumvent, or to accelerate their innovations, or to develop new business relationships with other partners, and in the end these tools become powerless… In the medium to long term, these methods rarely work.”
