Fear of global recession due to prolonged conflict
Prolonged conflict threatens global recession
The situation has remained critical since the beginning of the war between America and Iran on February 28. It has been more than two months since this conflict, and neither Iran has conceded defeat nor the United States has won. Currently, both the countries are not attacking each other, but the situation is still delicate.
Iran’s attacks and closure of the Strait of Hormuz have had a negative impact on crude oil production, affecting oil and gas supplies globally. Meanwhile, the International Monetary Fund (IMF) has expressed concern over the situation. IMF chief economist Pierre-Olivier Gorinchas has warned that if the conflict continues and oil prices remain high, global economic growth could fall to about 2%, which is generally considered a global recession.
He also reported that global inflation was expected to decline from 4.1% to 3.8% before the war, but is now projected to reach 4.4%.
America’s economic loss due to war
According to Harvard economist Linda Bilmes, America has spent about 1 trillion dollars (Rs 95 lakh crore) on this war, while the US government has said to spend only 25 billion dollars. America has also suffered losses on the economic front due to the war. Inflation is continuously increasing, due to which people are taking to the streets to protest against the Trump administration.
China and Russia benefit from war
America has suffered losses in this conflict, while China and Russia are benefiting. China appears to be relatively strong in this situation, because it had already accumulated oil reserves and had focused on alternative energy. China has also benefited diplomatically from the weakening of America’s image.
China’s oil and gas companies are also profiting from this war, and it is estimated that the six biggest companies could make profits of up to $94 billion this year. Furthermore, Russia’s economy is also benefiting from this conflict, as its earnings have increased due to higher oil and fertilizer prices.
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