Chartbook 440: Between complacency, escapism and cognitive dissonance. Impressions from the spring week in Washington, April 2026.

In April the meetings of the IMF and the World Bank attract a crowd of financial decision-makers of all types to Washington DC. Unlike New York, DC is not normally a center of global finance. One of the fascinating things to watch during the spring and autumn meetings is to see the mingling of global finance with the “blob” i.e. the world of DC think tanks, the IMF/World Bank nexus, a sprinkling of NGOs and the Washington DC “swamp” i.e. US national politics.

In April 2026, one might imagine that such a meeting would be a theatre of polycrisis. We are in the midst of two shooting wars. More broadly, indicators of policy uncertainty are at spectacular levels.

In the latest World Economic Outlook of the IMF, the severe scenarios for the impact of the Iran war are spectacularly bad.

“In the severe scenario, (1) The shock to commodity prices is more severe and persistent, with oil prices increasing by 100 percent starting in the second quarter of 2026, relative to the January 2026 WEO Update baseline, but also staying at that level in 2027, before dissipating in 2028 (corresponding to an average petroleum spot price index of about $110 per barrel in 2026 and about $125 in 2027). Gas prices for Europe and Asia increase by 200 percent over the same period, and food commodity prices increase by 5 percent in 2026 and 10 percent in 2027. (2) One-year-ahead inflation expectations ratchet up by as much as 100 basis points in advanced economies by 2027 and by as much as 130 basis points in emerging markets excluding China, also by 2027. (3) A significant risk-off episode pushes up corporate premiums in advanced economies and in China by 100 basis points in 2026, and they stay at that level in 2027, while emerging markets excluding China experience a widening in sovereign spreads of 100 basis points over the same period, along with an increase in corporate spreads of 200 basis points. As in the adverse scenario, the monetary policy response is geared toward containing inflationary pressures rather than stabilizing output.”

We could see a major hit to global growth and a nasty surge in inflation.

Source: IMF WEO April 2026

But, far from such scenarios leading to an earnest conversation about worst case scenarios and their possible impact on the world economy, what actually ensues is a conversation defined by silences and euphemism. The conversation is not prescripted as at China’s Development Forum, but the conversation is nevertheless stilted.

The Trump administration representatives talk their book.

US policy wonks, including those associated with the Dems, tiptoe around the reality of disruption coming from the White House.

Financial market players point to the relative stability of equity valuations and the stability of bond markets.

Meanwhile, the IMF provides a helpful graphic explaining why its gloomy forecasts for 2025 were trumped by global economic resilience.

Source: IMF WEO April 2026

The ongoing US-Israeli assault on Iran is discussed, if it is discussed at all, in terms of the extraordinary daily expenditure claimed by the Trump administration - of $2 bn per day. Or, in terms of its impact on relations with the Europeans.

China is discussed. But China itself, is barely in the room.

Shyly, in closed door meetings, people will ask, “are we being complacent”? Are we underestimating the risks?

Possibly, but it surely goes deeper than that. The very construction of our situation as one of “uncertainty” and “risk”, denying the obviously political origin of the shocks, amounts to a cocktail of escapism and cognitive dissonance.

The cognitive dissonance manifests in the treatment of politics and the derangement of the United States, even in DC itself, as some kind of “external”, ultimately “exogenous” disturbance.

The escapism lies in the underlying assumption of a domain of rational market calculation, investment and business process that all simply continue “regardless”. And of course, for many in the DC rooms they do, in fact, simply continue and will do so. But there is no reckoning with what makes this possible and where the boundaries of that stability will be drawn.

And as a way of making sense of the mess, naturalism can also offer hope.

In one particularly candid, off the record exchange, a well-connected DC/corporate operator remarked to a large table: “We know we are burning the house down. An entire system is being reduced to ashes. Its a historic transformation. But, you know, new growth flourishes after a fire.”

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