Janet Yellen Uncovers Surprising Insights on Israel's War: Shocking Economic Impact Revealed!
The war in Israel is predicted to have minimal economic consequences globally, as stated by US Treasury Secretary Janet Yellen
US Treasury Secretary Janet Yellen stated on Wednesday that the ongoing conflict between Israel and Hamas is not expected to exert a substantial influence on the global economy. Speaking at the International Monetary Fund (IMF) and World Bank annual meetings in Morocco, she mentioned that while they are keeping an eye on the possible economic ramifications of the crisis in Israel, it is not a primary factor shaping the worldwide economic outlook.
"Thus far I dont think weve seen anything suggesting it will be very significant," she added.
Supermarket in Chicago, Illinois, sells grocery items on August 09, 2023. Despite some stabilization, food inflation persistently rises by double digits in numerous counties.
The IMF anticipates a higher likelihood of a smooth economic transition for the global economy. Despite the ongoing conflict, stock markets worldwide have primarily disregarded the situation. Wall Street, in particular, recorded gains on Tuesday, partially attributed to the decrease in oil prices.
Global oil prices skyrocketed earlier this week due to concerns of the war leading to increased instability in the oil-rich Middle East. A potential danger lies in the possibility of stricter implementation of sanctions on Iran, a country that has previously supported Hamas but denies any involvement in the recent attack.
Iran has witnessed a significant surge in oil exports this year, particularly to China. Some analysts believe that this is partly due to a more lenient approach from Washington towards Iran.
Yellen emphasized on Wednesday that there had been no relaxation of sanctions on oil exports from Iran by the United States. She stated that they have consistently assessed the situation based on available information in order to further tighten the sanctions. Yellen mentioned that she had no new updates to share at the moment.
A potential shortage in supply could cause oil prices to rise further, given the existing increase resulting from reduced exports by major producers Saudi Arabia and Russia. Additionally, Chevron (CVX) announced on Monday the closure of a natural gas field off the coast of Israel. If this shutdown continues for an extended period, it may result in decreased gas exports to neighboring countries Egypt and Jordan, further straining the already limited global gas market and leading to higher energy prices.
A day after a rocket launched from the Gaza Strip hit a building in Tel Aviv, Israel, locals are seen inspecting the rubble on Sunday, October 8, 2023. In an unprecedented multi-front attack, the militant Hamas rulers of Gaza initiated the assault, simultaneously firing thousands of rockets and infiltrating the heavily fortified border through air, land, and sea. This brazen attack resulted in the deaths of hundreds and the capture of numerous individuals. Gaza's Palestinian health officials also reported a significant number of casualties due to Israeli airstrikes.
Oded Balilty/AP
Oil price spikes on Israel war. Here's what a wider conflict might mean
This week, IMF's chief economist, Pierre-Olivier Gourinchas, expressed concerns about the impact of commodity prices on inflation and their potential for increased volatility due to climate and geopolitical shocks. On Tuesday, Gourinchas stated that it was premature to determine the impact of the war on economic growth in both the region and globally.
The IMF currently believes that central banks have a greater chance of successfully controlling inflation without causing a worldwide recession. However, its most recent World Economic Outlook report, which was completed before the conflict began, warned that economic growth was still feeble and uneven.
The agency predicts that the global economy will grow by 3% this year, which is lower than the average of 3.8% seen between 2000 and 2019. The agency has revised its forecast for US growth upward, as compared to the predictions made in July, but has downgraded its outlook for Europe and China. Additionally, the IMF has slightly reduced its forecast for global growth in 2024 to 2.9%.
Robert North contributed reporting.
