What started off as a regional conflict has emerged out to be a global issue with everyone from the US to Australia ready to carry out raids in the country that is positioned in the Middle East. Tensions cropped up after a chemical attack that killed hundreds of people including children in the rebel area lying in the proximity to the capital city of Damascus. Syrian President Bashar Assad is alleged to be the mastermind behind the poison attack on his own people; however he denies being a part of this ghastly mission. When the world economy is already surrounded by hot-blooded and unprecedented times, courtesy, tapering of Quantitative Easing, the Syrian war may prove to be the last blow to it. What impact Syrian crisis will have on the world economy? A steep rise in price of oil will be an inevitable consequence of this war. Once the war begins, price of a barrel of Brent Crude can very easily shoot up to prices preciously witnessed during 2008. It can pose as a bigger risk for Europe than America as the American economy is already carrying huge inventories of shale gas. Once the oil price augments, the world is expected to encounter the problem of hyperinflation. Economists believe that regional implications have probably been underestimated by the market. For them, these could easily take into loop all the major oil producers including Iran and Iraq. A statement from the French Bank Societe Generale claimed that Brent can very easily mount up to $150 if the war begins. As per official records, oil production per day has already fallen down to 50,000 barrels from 350,000 bpd since the time the conflict began to take shape in Syria. Once again, investors are turning towards gold as a safe haven to their money. The bullion is hitting high at around $1400 to $1500 an ounce for the past few days now. In these difficult financial times, it is turning out to be the rightmost scramble for one’s investment safety. Emerging markets (EM) will be the most unkindly hit by this emerging clash. India, Indonesia, Brazil and South Africa, countries whose currencies are already depreciating against the dollar, may witness further downfall in the wake of the crisis. The conflict can push to the corner any hope of their revival of the situation any time soon. Lately, in the wake of improving economic situation in the US, global investors had started parking their money back into the American equities and debt market. Even the employment scenario seemed to improve significantly. But the Syrian war will bring to halt any further enhancement in the fiscal situation of the US. The price of commodities will climb up once again and emerging markets especially export based economies such as China will face the pinch in the wrong place. In the Middle East, Dubai’s stock exchange shed almost 1% to 2% points in the last week of August, recording a six week low. Barring energy shares, other stocks are biting dust in the US bourses. The mess that the global economy is anticipating with the upcoming Syrian war at least proves a point that the US can’t afford to remain engaged in this conflict for long. The threat of instability in the Middle East historically pushes oil prices higher. One theory that is doing rounds says that for the reason the shale gas reserves would be unable to meet America’s long term energy needs, attack on Syria is a good option for Uncle Sam. Some of the recent articles in major American dailies claim that it’s proving to be costlier using shale gas as a substitute to oil and hence, the US wants to build up its oil reserves once again. Even the former US presidential candidate John McCain attacked President Obama over his stance that seems to be based around economic grounds to him. China and Russia have already cleared their stand on the matter and warned the US and its allies not to repeat the mistake they made in Afghanistan and Iraq. For them, the Syrian issue is more complex than what it appears in the first look. In the meantime, we can only observe what is happening in Syria akin to the last two years since the trouble began. However, we hope the world leaders make right choices using their wise heads and not looking at their empty coffers. AUTHOR BIO: Mike Chapman is Health & Fitness Consultant Based in New York having 15+ years of experience working in clinics, gyms and also Yoga instructor dealing with health, pain and injuries often reviews weight loss and diet supplements for their safety, performance, side effects, efficacy and more. He also have keen interest in world economy and currently watching all activities of United States and writes about them .
Related Articles -
Syria, United States, America, World Economy, Syria crisis, Humannity, Revolt,
|