Economists warn that markets may be underestimating the potential economic damage from a prolonged Iran war. Frederic Schneider highlights risks including rising energy prices, economic slumps, and potential stagflation. Key areas of concern include the Strait of Hormuz, which is vital for global oil and gas supply, and the impact on agriculture due to fertilizer shortages. The conflict could reshape business perceptions of the region and complicate central banks' efforts to control inflation.