El Erian: “The higher the risk of escalation, the greater the risk to the global economy.”
WTO Secretary-General: “Expansion of war will have an impact on global growth and trade”
While Israel is carrying out phased ground operations in the Gaza Strip, an expert analysis says that the global economic risk is increasing due to heightened tensions in the Middle East.
According to CNBC on the 30th (local time), Allianz Group chief economic advisor Mohamed El-Erian, a prominent Wall Street economist, said at the AIM conference held in Dubai, United Arab Emirates, “The longer the current conflict continues, the more likely it is to expand.” .
Advisor El-Erian said, “The higher the risk of escalation, the greater the risk of it spreading globally in economic and financial terms,” and expressed concern that this would worsen problems already facing the global economy, such as stagnant growth, inflation, and widespread market disruption.
As Israel enters its fourth day of ground operations in the Gaza Strip, anxiety is growing in the market that the war may expand to nearby regions such as Iran and Lebanon.
In particular, oil prices are showing increased volatility, rising sharply on the 27th and then falling on the same day due to concerns about supply restrictions.
Ngozi Okonjo-Iweala, Secretary-General of the World Trade Organization (WTO), also warned that if the war between Israel and Hamas expands, it could cause great chaos in the global economy, raising energy prices and blocking major trade routes.
Secretary-General Okonjo-Iweala predicted in an interview with CNBC that day, “If it spreads beyond the current (conflict) region to other Middle East regions, there will be an impact.”
In particular, he said, “As this region is a supplier of a significant portion of the world’s energy related to natural gas as well as oil, it will have an impact on global growth and trade,” and added, “Trade growth is in a fairly bleak situation due to a decrease in overall aggregate demand.”
Previously, the WTO lowered its trade growth forecast for this year due to the slowdown in the global manufacturing industry. The global merchandise trade volume in 2023 is expected to grow by 0.8%, less than half of the 1.7% expected in April. The projected growth rate for 2024 is 3.3%.
“China’s economic rebound after the pandemic is not as strong as we had hoped, and growth in the European Union is slower than expected,” said Secretary-General Okonjo-Iweala. “The United States appears to be doing well, but overall aggregate demand is still weak across most regions and sectors.” “is decreasing, and inflation is continuing as interest rates rise for a long period of time.”
Earlier, Kristalina Georgieva, head of the International Monetary Fund (IMF), said on the 25th, “In terms of the economic outlook for the epicenter of the war, it is dire,” and predicted, “There will be a negative impact on neighboring countries, including trade channels, tourism channels, and insurance costs.” did.
World Bank President Ajay Banga also recently said in an interview with CNBC, “We were working toward a more peaceful Middle East, and many countries in the region were starting to talk about opportunities to move forward with a new cooperation platform,” adding that the goal of regional cooperation in the Middle East was achieved through this war. I was concerned that it had become more difficult to do so.
Source: Donga
Mark Jones is a world traveler and journalist for News Rebeat. With a curious mind and a love of adventure, Mark brings a unique perspective to the latest global events and provides in-depth and thought-provoking coverage of the world at large.