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What’s Israel-Hamas war’s impact on global economic outlook?

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7 months ago

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After indicating increased optimism about controlling global inflation brought on by the pandemic and Russia’s invasion of Ukraine in 2022, the start of a war in the Middle East may force central bankers to battle fresh inflationary trends and inflict a hit on economic confidence.

Israel on Sunday officially declared a state of war after a surprise attack by Hamas a day earlier, resulting in hundreds of deaths adding to the sense of global instability caused by Russian military actions almost 20 months ago.

So far, the impact of the Israel-Gaza war on global inflation remains unclear as it depends on how long the conflict lasts, how intense it becomes, and whether it spreads to other parts of the region.

“It’s too early to say what the implications may be, though oil and equity markets may see immediate fallout,” Agustin Carstens, general manager of the Bank for International Settlements, said in a presentation to the National Association for Business Economics (NABE).

However, the war has the potential to add an unpredictable set of dynamics to a weakening global economy.

Additionally, it may also affect US markets that are still adjusting to the possibility that the Federal Reserve would keep interest rates high for longer than many investors had anticipated, Reuters reported.

“Any source of economic uncertainty delays decision-making, increases risk premia, and especially given that region…there is an apprehension about where oil is going to open,” said Carl Tannenbaum, chief economist with Northern Trust.

“The markets will also be following what the scenarios are looking like,” he said, and whether, after decades of instability in the Middle East, this outbreak of violence evolves differently.

“The question will be is this iteration something that will throw the long-term equilibrium out of balance?”

That and related issues will likely vault high on the agenda of global financial leaders gathering this week in Morocco for meetings of the International Monetary Fund (IMF) and World Bank to take stock of a global economy that remains in a deep state of flux from the pandemic and rising trade tensions.

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Pakistan’s gold prices are still declining; see the most recent

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6 days ago

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The price of 10-gram gold reduced by Rs943 to settle at Rs207,733, while the price of gold dropped by Rs1200 to close at Rs242,300 a tola, according to the Sindh Sarafa Jewellers Association.

In the global market, the price of the precious metal fell by $10 to $2,349 per ounce, resulting in losses.

At 04:48 GMT, the spot price of gold had dropped by 0.2% to $2,354.77 per ounce. In the previous session, prices reached a two-week high.

American gold futures dropped 0.6% to $2,361.

Spot silver decreased by 0.4% to $28.03 per ounce, while palladium remained steady at $978.03 and platinum decreased by 0.1% to $992.89.

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Pakistan and the IMF begin talks for a new loan.

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6 days ago

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Pakistan is requesting a $6 to $8 billion bailout package from the international lender over the next three to four years to address its financial troubles.

A mission team led by Nathan Porter, the IMF’s Mission Chief in Pakistan, is meeting with a Pakistani delegation led by Finance Minister Muhammad Aurangzeb.

According to sources familiar with the situation, Islamabad may face more difficult options, such as raising power and gas bills.

Mr. Aurganzeb informed the IMF team that the country’s economy has improved as a result of the IMF loan package, and Islamabad is ready to sign a new loan programme to further develop.

The IMF mission expressed satisfaction with Islamabad’s efforts to revive the country’s struggling economy.

The IMF praised Pakistan’s economic growth in its staff report earlier this week, but warned that the outlook remains challenging, with very high downside risks.

The country nearly avoided collapse last summer, and its $350 billion economy has stabilized since the end of the last IMF program, with inflation falling to roughly 17% in April from a record high of 38% last May.

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Petrol prices are likely to drop significantly beginning May 16.

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6 days ago

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According to sources, the government is set to decrease petrol prices by Rs 14 per litre and diesel prices by Rs 10 on May 16 for the next fortnight’s revision.

Last month, the government reduced the price of fuel and high-speed diesel by Rs5.45 and Rs8.42 per fortnight, respectively.

The current fuel price is Rs288.49 per litre, while the HSD price is Rs281.96.

Meanwhile, oil prices fell further on Monday, as signs of sluggish fuel consumption and comments from U.S. Federal Reserve officials dimmed optimism for interest rate reduction, which may slow growth and reduce fuel demand in the world’s largest economy.

Brent crude prices down 25 cents, or 0.3%, to $82.54 a barrel, while US West Texas Intermediate crude futures fell 19 cents, or 0.2%, to $78.07 per barrel.

Oil prices also declined on signals of poor demand, according to ANZ analysts, as gasoline and distillate inventories in the United States increased in the week before the start of the driving season.

Refiners throughout the world are dealing with falling diesel profitability as new refineries increase supply and warm weather in the northern hemisphere and weak economic activity reduce demand.

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