On-going Israel-Palestine Conflict could trigger global recessions: Economists warn
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Washington: Prominent figures on Wall Street have expressed deep concerns over the potential global repercussions of the ongoing conflict in the Middle East, according a report published in The Guardian.
Larry Fink, the CEO of BlackRock, the world's largest asset manager, and Jamie Dimon, chair of JP Morgan, both emphasized the significant impact of recent events on the already fragile world economy.
Fink highlighted the role of geopolitical risks in shaping global economic trends. He noted that the combination of Hamas attack on October 7, Israel's subsequent attack on Gaza, and Russia's invasion of Ukraine last year had pushed the world "almost to a whole new future."
Fink emphasized that rising fear worldwide is leading to a withdrawal from consumption and spending, creating a higher probability of European and U.S. recessions.
Dimon echoed Fink's concerns, describing the current geopolitical landscape as "quite scary and unpredictable." He emphasized the critical importance of ongoing conflicts in determining the future of crucial global elements such as freedom, democracy, food, energy, and immigration.
Dimon warned that the world is facing the most dangerous time in decades, with potential far-reaching impacts on energy prices, food costs, international trade, and diplomatic ties.
The conflict between Israel and Hamas is seen as particularly threatening to the global economy due to the world's heavy reliance on the region's oil, accounting for a third of the market. Economists fear that spikes in oil prices, exacerbated by the ongoing conflict, could trigger global recessions.
These sentiments from Wall Street are reflective of broader concerns, as evidenced by a recent leader article in The Economist titled, "The world economy is defying gravity. That cannot last." The publication suggests a growing scepticism about the sustainability of current global economic trends.