Israel-Hamas War has been an unexpected turn adding fuel to the prevailing Global Political unrest. A major part of the globe was already facing the hit of rising inflation, interest rates, high hitting oil prices and the impact of economic sanctions. The divide amongst the countries has been quite visible since the Russia-Ukraine war started last year. The Israel-Hamas war has further led to the global turmoil in terms of political as well as economic uncertainties.
The globalization of economies carries the economic downturn several miles impacting lives on the far part of the world and especially the situation like wars certainly have a far reaching and a sudden impact on the economies. Israel-Hamas war might further add to the economic distress. While the real economic impact of Israel-Hamas war is not well established yet, one may clearly think of following results:
Increase in oil prices:
Increase in oil prices could be one of the most likely outcomes of the Israel-Hamas war and it has been seen in past that the situations like war do result in increasing oil demand. An unrest in middle east certainly ticks the box and hence the increase in oil prices is highly likely.
Stock market volatility:
The stock markets are generally sensitive towards the geopolitical disruptions and sudden war situation does create panic amongst the investors resulting into drastic reactions like selling the stocks and getting funds out. Any further news about the moves made by Israil could further add fuel to this stress leading to high volatility in world stock markets.
Increase in gold price:
Gold has been the preferred mean of holding value in global panic situations and the drain in the stock market investment further adds to the demand of gold leading to gold price hikes. Gold has been considered as one of the safest modes of holding wealth and with global economic uncertainties, it would certainly be in demand.
The Israel-Hamas war is unlikely to have a significant impact on the global economy, US Treasury Secretary Janet Yellen said last week.
“While we are monitoring potential economic impacts from the crisis [in Israel], I’m not really thinking of that as a major driver of the global economic outlook,” she said at the IMF and World Bank annual meetings in Morocco.
“Thus far I don’t think we’ve seen anything suggesting it will be very significant,” she added.
Impact of earlier Israel-Hamas Wars:
It was seen that Israel-Hamas was in 2014 lead to about $874 million economic damage which equals to about 0.3% of Israel’s GDP. The central bank had projected that Israel’s economy will grow by 3% in 2023 and 2024.
As per the preliminary estimate by Bank Hapoalim, one of the largest banks in Israel, it is estimated that the economic impact of the ongoing Israel-Hamas war will be at least around $6.8 billion ie 1.5% of Israil’s GDP.
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