Satyajit Das Warns of Global Economic Stagflation and Deflation Risks

In a detailed piece published on May 19, 2026, in the New Indian Express, Satyajit Das, a former banker and author, looks at the medium-term prospects for the global economy. He points out several major risks, such as inflation spurred by the Iran conflict, stagflation, a potential financial crisis, and the threat of deflation. The Strait of Hormuz has been closed, leading to a significant drop in global oil and gas output—12% and 20%, respectively. Rising energy costs are fueling inflation, while global growth outside the US is stunted by rising expenses and uncertainty. The US shows a K-shaped recovery, with the poorest households spending 7% less. Europe faces its own issues, but Asia and Africa are hit hardest. Public finances are under pressure, with US military spending possibly exceeding $70 billion and overall economic damages surpassing $1 trillion. The looming deflation risk, especially for highly indebted countries, recalls the Great Depression and Japan's economic stagnation. Das cautions that policymakers might resort to drastic measures like income controls or nationalization, yet many businesses and investors remain oblivious to these threats.