Israel-Hamas war’s human cost is primary, but geopolitical risk to economy persists
Israel-Hamas war’s human cost is primary, but geopolitical risk to economy persists
President Joe Biden is making a trip to Israel on Wednesday, intending to show U.S. support for Israel and keep the Israel-Hamas war from spreading.
Of course, concern about the economic effects of the conflict take a backseat to the human tragedy and loss of life on both sides. But there are also geopolitical risks to the global economy.
There are lots of ways the Israel-Hamas war could play out. The worst-case scenario? Direct conflict between Israel and Iran.
“The geopolitical pot is just boiling,” said Bernard Baumohl, chief global economist at the Economic Outlook Group.
If the conflict widened to include Syria, he said that global economic growth could decline next year by as much as 1% and “that the global economy would really be on a tight rope over the possibility of a recession.”
A wider conflict could send oil prices up to $120 a barrel, Baumohl added. Other, lesser known commodities could also be affected.
“Maybe you remember bromine from your high school chemistry class,” said Jesse Colvin, an analyst at Height Capital Markets. “It’s a key chemical component in electronics, including the manufacturing of semiconductor chips.”
Colvin noted that 74% of the world’s bromine supply is produced in the Dead Sea, and Israel’s bromine exports could be jeopardized if rockets hit Israeli ports.
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