What the Middle East Now Implies for the Global Economy, Markets
They are relatively well-placed to handle the immediate uptick in the geopolitical risk premium. They are not well-placed to navigate further escalations that would involve more parties in a more significant manner.
Assets markets will be impacted.
Photographer: Atta Kenare/AFP via Getty Images
It is generally agreed that this month has seen a significant escalation in long-standing Iran-Israel tensions. Both countries argue that their territory has been attacked in a manner that warrants and justifies direct retaliation. Both are threatening further escalation, notwithstanding other countries calling for calm.
Regardless of what happens next, many feel that a significant line has now been crossed in an unsettled part of the world that has experienced tremendous human tragedy, especially in the last six months. What some had deemed a relatively contained disequilibrium in the Middle East has now transitioned to a perilously unstable disequilibrium involving many parties.