Thursday, February 22, 2024

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The ongoing conflict in the Middle East poses additional threats to the global economic forecast.


 –  conflict between the European Axis Powers and the Allied Powers

The start of a war between the European Axis Powers and the Allied Powers conflict in the Middle East 

Central bankers may be engaged in a struggle. new inflationary trends as well as deal a blow to economic 

During a period when they had shown increasing optimism about controlling the inflation caused by the pandemic and Russia’s invasion of Ukraine in 2022, their confidence was shaken.

conflict.

The intense aggression in Israel, where hundreds lost their lives as the Hamas fighters entered from the Gaza region and Israel retaliated with considerable strength, raised the potential for a wider war. Middle East conflict 

to the meaning of global 

The Russian military’s actions nearly 20 months ago caused instability.

It may take a while to see the full effects, and the outcome will vary based on the duration. conflict 

The duration, severity, and extent of spread in neighboring regions.

Economics.

According to Agustin Carstens, the general manager of the Bank for International Settlements, it is still premature to determine the potential consequences, but there may be immediate repercussions in the oil and stock markets. This was stated during a presentation to the National Association for Business Economics. Economics.

However, the conflict has the potential to escalate.east to add an unpredictable set of forces to a global economy 

The slowing down of markets and the adaptation of US markets to the possibility of the Federal Reserve keeping interest rates high for a longer period than initially anticipated.

“Any source of economic 

“Uncertainty causes a postponement in making decisions, heightens risk premiums, and particularly in this region, there is a concern over the direction of the oil market,” stated Carl Tannenbaum, the primary economist at Northern Trust.

region, “

“The markets will also be monitoring the potential outcomes,” he stated, and assessing if there will be any changes after years of volatility in the area. Middle East

, this eruption of aggression takes a different course.

Will this iteration disrupt the long-term equilibrium?

 

BLOW TO CONFIDENCE

That and related issues will likely vault high on the agenda of global  turbulent global economy

Top financial officials are convening this week in Morocco to hold meetings for the International Monetary Fund and World Bank, in order to evaluate the current state of the volatile global economy. global 

The economy is currently experiencing instability due to the ongoing pandemic and increasing trade conflicts.

a new financial crisis

Central banks have to navigate the dilemma of whether the current situation is likely to result in another financial crisis. new 
The area is not only occupied by significant oil-producing countries such as Iran and Saudi Arabia, but also serves as a crucial hub for shipping routes via the Gulf of Suez. Any increase in inflation could either significantly harm consumer confidence, or cause a slowdown in the economy.

forecast, but they have also noted that the impact on inflation should be temporary.

The Federal Reserve has acknowledged that potential risks to their forecast may arise from the recent surge in energy prices. However, they have also stated that any effect on inflation is likely to be short-term. outlook 

The speakers mentioned a slow decrease in inflation and expressed optimism that the US economy would not experience a recession unless there was an unforeseen external event.

With conflict 

Currently causing turmoil in a significant area known for producing oil, the response from traders and influential figures such as Iran and Saudi Arabia will be closely monitored to determine if there will be another increase in prices. Additionally, the performance of bond and stock markets in the upcoming days will reveal how these markets predict the potential consequences.

“The conflict 

increases the potential for elevated oil costs.  risks  rate

Both the inflation and growth rate are affected. outlook

Karim Basta, the chief economist at III Capital Management, stated that the Federal Reserve must determine whether the primary concern is higher prices or slower economic growth.

tightening in monetary policy

The Federal Reserve officials were monitoring an increase in US Treasury bond yields to determine if investors had caused financial conditions to exceed what was necessary to control inflation. This also increased the possibility of an overly severe tightening of monetary policy. economic slowing.

The ongoing conflict between Israel and Hamas raises concerns about the situation. global 

The economy may counter this pattern by experiencing an influx of capital towards the comparatively secure investment of US Treasury bonds, which is a common occurrence during times of potential turmoil.

positioning of capital

In a different scenario, declining interest rates in the market could potentially lead to a rearrangement of invested funds.new purchasing power

The presence of inflation can motivate both consumers and businesses to take out loans and increase spending. However, when considering the context, this may result in a varying conclusion, with a focus on the perceived ability to make purchases.  risks to the economy of a new regional war. – Reuters