[Econ & Biz] Will limited economic impact of Israel-Hamas conflict continue?

이-팔 전쟁의 미미한 경제적 영향 여러 시나리오에서 바라본 국내외 경제에 미치는 영향은? It’s been almost three weeks since the Israel-Hamas war sparked concern not only over humanitarian crisis but over rising economic risks, in terms of volatility in energy prices and rising inflationary pressure. Business correspondent Shin Ha-young is here to talk about the economic impact that could play out in the Middle East and beyond. Thanks for being here, Ha-young. Good evening, Jung-min. How is the economy performing these days when it comes to oil prices? Well, since the beginning of the Israel-Hamas conflict, all eyes have been on global oil prices, as that can push up inflation both at home and abroad. Reflecting the concern, global oil prices jumped more than 4 percent on the third day of the Israel-Hamas conflict. It was the biggest one-day gain since April 3rd. However, for the past few days, fluctuations have been less significant, even though oil prices rebounded as of Wednesday after prices fell on Tuesday for the third straight session. This came amid diplomatic efforts from a number of countries to release hostages. Also, Israel has not yet launched a ground invasion due to international pressure, alleviating concerns about disruptions in oil supply. In fact, as Israel and Palestine are not major oil-producing nations, experts expect that the impact on global oil prices will be limited. However, it’s too early to predict the actual economic impact as it's uncertain how the conflict will unfold. Bloomberg Economics has examined the possible economic impact under three scenarios. Those are Israel’s ground invasion of Gaza, a multifront war in Gaza, where Lebanon and Syria get involved, and, lastly a direct conflict between Israel and Iran. Bloomberg estimates a war between Israel and Iran could push oil prices to 1-hundred-50 dollars a barrel and drop global growth to 1-point-7 percent. This is because of Iran's proximity to the Strait of Hormuz, a vital oil trading route. Take a listen. "If Iran disrupts oil tankers passing through the Strait of Hormuz, or even blocks the strait, it could significantly impact global oil prices. This is because about 30 percent of the volume of the world's total oil consumption passes through that route." Is there any concern over the supply chain? It's been a significant issue when economists talk about the Ukraine war. That’s a good point, Jung-min. Given that both Russia and Ukraine are key producers of energy, raw materials, and agricultural commodities, concerns about potential disruption in the supply chain were already acknowledged from the early stage of the war. But, in the case of the Israel-Palestine conflict, the region's contribution to global raw material production is not substantial. In fact, according to a report from the Korea International Trade Association, Israel and Palestine each account for less than 0-point-4 percent of South Korea’s overall trade, meaning the effect is expected to be insignificant. However, an expert said it’s necessary to diversify the supply chain of certain items. Take a listen. "South Korea heavily depends on Israel for key items, including bromine and airborne radar for aircraft. With an import dependency exceeding 90 percent for these items, a prolonged Israel-Hamas conflict could pose challenges for South Korea. Therefore, it is crucial to diversify the supply chain to secure alternative suppliers." He added that particularly high-tech industries could face supply chain disruptions as Israel is a hub for this sector. "Since Israel is a hub for advanced industries, there are Intel's chip factories, and R&D centers and sales offices of South Korean firms like Samsung and SK hynix. A prolonged war could potentially disrupt the supply chains in these advanced industries." What other problems might South Korea face, and what response can we expect? Well, in general when the situation globally becomes uncertain, there is a tendency for people to show a preference for safe-haven assets, in this case, I'm referring to the U.S. dollar. That would also mean the Korean won depreciating against the greenback. And this is the concern that the Bank of Korea has these days... #Israel #Hamas #War #Economy #Economic_impact #이스라엘 #하마스 #경제 #영향 #Arirang_News #아리랑뉴스 📣 Facebook :   / arirangtvnews   📣 Twitter :   / arirangtvnews   📣 Homepage : https://v2.arirang.com/ 2023-10-26, 18:00 (KST)