Iran-Israel tensions: Economists warn of global market turbulence

As tensions simmer between Israel and Iran following recent Iranian attacks, economists are closely monitoring the potential implications for global markets. Tasos Giasemidis, an economist, weighed in on the situation, highlighting possible scenarios and their economic ramifications.

In an interview with SPOR FM and the show DIASPORΑ NEWS on Monday and Tuesday, Giasemidis underscored the significance of any response from Israel to Iran's actions. He emphasized that while there were no immediate surges in international oil markets post-attacks, the situation could rapidly change if regional conflict escalates.

Giasemidis outlined a bleak scenario, warning that a significant Israeli reaction could disrupt oil supplies from the Persian Gulf region, which currently accounts for approximately 30% of global oil exports. He further noted the potential for Iran, through proxies like the Houthis, to exert control over vital shipping lanes, such as the Strait of Hormuz.

Such developments, Giasemidis cautioned, would likely drive up oil prices, triggering inflationary pressures across various sectors. A mere 10% increase in oil prices, he explained, could lead to a 0.2 – 0.25% rise in inflation, prompting discussions about inflation management and potentially delaying central bank decisions to reduce interest rates.

However, Giasemidis also offered a reassuring perspective. Should the situation stabilize without significant escalations, he asserted that the Cypriot economy would remain relatively unaffected, given current economic indicators.

As analysts continue to monitor developments in the region, the global economic landscape hangs in a delicate balance, with the potential for geopolitical tensions to reverberate across financial markets worldwide.