Bloomberg analysts have presented an analysis of the potential impact of the crisis between Israel and Palestine on the global economy. They have outlined three main scenarios, ranging from relatively expected outcomes to more catastrophic ones.
1. Ground Operation in Gaza and Border Clashes in Lebanon: In this case, the global implications would be minimal. The cost of oil will increase by approximately $4 per barrel, and the Volatility Index (VIX) will remain unchanged. Global GDP will decrease by 1 percentage point, and inflation will rise by the same magnitude.
2. Proxy War Involving Hezbollah, Unrest on the West Bank, and Syria’s Involvement: In this scenario, the consequences are significantly more severe. The cost of oil will rise by $8 per barrel, the Volatility Index will increase by 8 points, global GDP will decrease by 3 percentage points, and inflation will increase by 2 percentage points. While unpleasant, this outcome may still be manageable.
3. Direct Conflict Between Israel and Iran: In this case, the global economy faces a true nightmare. The cost of oil will increase by $64 per barrel, the Volatility Index will surge by 16 points (financial markets will begin to fluctuate), global GDP will decrease by 10 percentage points, and inflation will rise by 12 percentage points. In general, the world will be on the brink of recession, and we will witness an oil crisis reminiscent of the events of 1973 when oil prices skyrocketed fourfold due to an embargo. The global economies will begin to experience serious difficulties.