Paulson Warns of Systemic Risks Amid Iran Conflict and Rising Debt

Former US Treasury Secretary Hank Paulson has issued a warning regarding the multifaceted economic risks stemming from the ongoing conflict in Iran. Paulson suggests that the geopolitical instability is not only disrupting energy markets but is creating a ripple effect across the broader global economy. The primary concern centers on the persistence of inflation. Paulson argues that the war is likely to push prices higher, which in turn will force central banks to keep interest rates elevated for a longer duration than markets might currently anticipate. The fallout is expected to be felt most acutely in energy-dependent sectors. Specifically, the aviation and agriculture industries are highlighted as being under significant strain due to rising input costs and supply chain volatility. Beyond the immediate conflict, Paulson pointed to structural weaknesses in the global financial system. He cited the escalation of sovereign debt levels and the increasingly fragile diplomatic and economic relationship between the United States and China as mounting long-term risks. While Paulson acknowledged the current resilience of the US economy, he cautioned that the convergence of geopolitical strife and fiscal instability creates a precarious environment for investors and policymakers alike.