NEW DELHI: Fears that Israel’s escalating military operations in Gaza could escalate into a regional standoff are clouding the outlook for the global economy, threatening to slow expansion and revive emerging energy and food prices.
Rich and deficient countries were just beginning to catch their breath after a three-year series of economic crises, compounded by the Covid-19 pandemic and Russia’s invasion of Ukraine, the New York Times reported.
Skyrocketing inflation has subsided, oil has stabilized, and predicted recessions have been avoided.
Now, some major foreign monetary institutions and personal investors are warning that the fragile recovery may go awry, the New York Times reported.
“This is the first time we’ve had two energy shocks at the same time,” said Indermit Gill, lead economist at the World Bank, referring to the effect of the wars in Ukraine and the Middle East on oil and fuel. prices.
These increases in value do nothing but erode the purchasing power of households and businesses, but they also increase the cost of food production, exacerbating higher levels of food insecurity, especially in emerging countries such as Egypt, Pakistan and Sri Lanka, the New York Times reported.
As things stand, countries are already grappling with unusually high debt levels, low personal investment, and the slowest industrial recovery in five decades, making it difficult for them to emerge from the crisis through growth.
Rising interest rates, the result of central banks’ efforts to tame inflation, have made it harder for governments and personal corporations to access credit and default, according to the report.
“All of those things happen at the same time,” Gill said. We are in one of the most fragile situations in the global economy. “
Gill’s assessment echoes that of other analysts. Jamie Dimon, the chief executive of JPMorgan Chase, said last month that “this could be the most damaging era the world has seen in decades,” and described the standoff in Gaza as “the maximum and important for the Western world. “reported the New York Times.
Gregory Daco, lead economist at EY-Parthenon, said the worst-case scenario in which the war spreads out could simply raise oil costs to $150 a barrel from $85 today.
“The global economic consequences of this situation are severe,” he warned, citing a mild recession, a drop in inventory costs and a $2 trillion loss to the global economy.
The prevailing environment now is one of uncertainty, which weighs on investment decisions and may simply deter corporations from expanding into emerging markets. Loan prices have skyrocketed and corporations in several countries, from Brazil to China, are expected to struggle to refinance their debt, the New York Times reported.
At the same time, according to consultancy Oxford Economics, emerging markets such as Egypt, Nigeria and Hungary have suffered some of the worst aftermath of the pandemic, with weaker-than-expected growth.
Since Hamas’ attack on October 7, all sectors of Israel — construction, technology, agriculture and textiles — have been hit by a shortage of hard work, Le Monde reported.
On Tel Aviv’s waterfront, the structure of the luxury Mandarin Oriental hotel is paralyzed. The cranes and scaffolding are deserted. According to the report, nearly 80% of all projects under construction in Israel appear to be frozen.
While Hamas’ terrorist attacks are restricting the food activity of a traumatized society, a third of restaurants in major cities have not reopened due to a lack of staff and even customers.
Thousands of volunteers are now arriving from rural towns to make up for the lack of staff to pick seasonal fruits. WhatsApp teams have sprung up to send volunteers to hospitals and supermarkets, but it’s hard to say whether this outpouring of solidarity will last. reports Le Monde.
Above all, the high-tech corporations of which the country is so proud have observed their number of geeks and professional executives shrink by 10 to 15 percent, with only about 360,000 reservists mobilized through the military, the equivalent of 10 percent of the total population. workforce.