“All of these things are happening at the same time,” Mr. Gill said. “We are in one of the most fragile times for the global economy.”
Mr. Gill’s rating mirrors those of other analysts. Last month, JPMorgan Chase CEO Jamie Dimon said that “this may be the most dangerous time the world has seen in decades,” describing the conflict in Gaza as “the highest and most important matter for the Western world.”
Recent economic problems have been fueled by deepening geopolitical conflicts that span the continents. Tensions between the United States and China over technology transfer and security only complicate efforts to work together to solve other problems such as climate change, debt relief, or violent regional conflicts.
Overriding political preoccupations also mean that traditional monetary and fiscal tools such as adjusting interest rates or government spending may be less effective.
The brutal fighting between Israel and Hamas has killed thousands of civilians and brought agonizing misery on both sides. However, if the conflict remains under control, the ripple effects on the global economy are likely to remain limited, most analysts agree.
“It’s not clear at this point that the conflict in the Middle East is on track to have significant economic impacts” on the United States, Federal Reserve Chairman Jerome Powell said Wednesday, but added: “That doesn’t mean it’s not very important.”
Middle Eastern oil producers do not control the market as they did in the 1970s, when Arab countries dramatically reduced production and imposed an embargo on the United States and some other countries after a coalition led by Egypt and Syria attacked Israel.
Right now, the United States is the world The largest oil producerand the alternative Renewable energy sources It constitutes little more than the world’s energy mix.
“It’s a very volatile, uncertain and scary situation,” said Jason Bordoff, director of the Center on Global Energy Policy at Columbia University. But there is “a recognition among most parties – the United States, Europe, Iran and other Gulf states,” referring to the Persian Gulf, “that it is not in anyone’s interest for this conflict to expand significantly beyond Israel and Gaza.” “.
Mr. Bordoff added that mistakes, miscommunication and misunderstandings can push countries to escalate even if they do not want to.
A significant and sustained decline in the global supply of oil – whatever the causes – could simultaneously slow growth and stoke inflation, a cursed combination known as stagflation.
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