2023-10-08 17:00:02
Could the serious conflict triggered by Hamas’ terrorist attack on Israel become a further burden on the economy? Lars Feld, the former chairman of the Council of Experts, and Ifo President Clemens Fuest made initial assessments to the FAZ at the weekend.
Heike Göbel
Editor in charge of economic policy, responsible for “The Order of the Economy”.
“The conflict will increase uncertainty about further geopolitical and global economic developments and thereby also put a strain on the German economy. But the effect is unlikely to be very large,” said Fuest. Feld, who is now director of the Eucken Institute, is similarly confident.
Although he does not expect any “acute economic effects of the conflict,” global uncertainty is increasing. An escalation cannot be ruled out, for example at the borders with Lebanon and Syria. “Investors will probably exercise a little more caution in their investments as a result. In this respect, negative economic effects can certainly occur, which will place a certain burden on the expected upswing,” stated Feld, who also advises FDP Finance Minister Christian Lindner.
Not like 50 years ago
Both economists point out differences from the Yom Kippur War 50 years ago. The situation is different today. “At that time, the OPEC countries responded to US support for Israel with an oil embargo that plunged the global economy into recession. “That is not to be expected today because the OPEC states are politically more divided and their importance for the world energy markets is less,” emphasizes Fuest. Israel will probably fight the conflict without major help from the USA.
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The situation would be different if Iran intervened. As long as that doesn’t happen, the global economic consequences are likely to remain limited. Feld also draws confidence from Egypt’s attempts at mediation. Leading economic research institutes recently predicted slight growth for Germany in 2024.
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