Middle East Conflict, Geopolitical Risks May Herald Global Economic Downturn, Say Financial Leaders – News18

The global economy is currently in a turbulent period with a series of geopolitical events casting a shadow of uncertainty over financial markets and economics worldwide. These events include the COVID-19 pandemic, the Russia-Ukraine war, and now the ongoing Israel-Hamas conflict. Now two of Wall Street’s biggest names have warned recently that a global recession could be triggered by the conflict in the Middle East as the humanitarian crisis challenges an already risky world economy.

The chief executive of the world’s largest asset manager, BlackRock, Larry Fink said that a combination of the Hamas violence of October 7, Israel’s resultant attack on Gaza, and Russia’s invasion of Ukraine last year had pushed the world into a “whole new future.”

In an interview with the Sunday Times, Fink said that when the Russian invasion occurred in Ukraine, they said that the peace dividend was over. “Geopolitical risk is a major component in shaping all our lives,” he added.

“We are having rising fear throughout the world, and less hope. Rising fear creates a withdrawal from consumption or spending more. So fear creates recessions in the long run, and if we continue to have rising fear, the probability of a European recession grows and the probability of a US recession grows,” Fink mentioned.

In a separate interaction, Jamie Dimon, the chair of America’s biggest bank JP Morgan agreed on the prognosis and said that the world is facing a crisis that is arguably the most serious since 1938.

He told the same newspaper that the combination of Israel’s war on Hamas and Russia’s invasion of Ukraine was quite scary and unpredictable.

He added that the US continues to have a strong economy and still has a lot of fiscal and monetary stimulus in the system. “What’s happening on the geopolitical front right now is the most important thing for the future of the world—freedom, democracy, food, energy, immigration,” Jamie said.

Three weeks ago, Jamie Dimon, who is one of the world’s best-known business executives and bankers, warned that the world may be living through the most dangerous time the world has seen in decades, with the escalating conflict potentially having far-reaching impacts on energy prices, food costs, international trade, and diplomatic ties.