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Fitch Ratings says Middle East conflict poses risk to global economy in 2024
(MENAFN) Fitch Ratings issued a warning on Friday, stating that the ongoing conflict in the Middle East poses a significant risk to the global economy in 2024 by potentially disrupting the oil supply.
The agency's report outlined a scenario in which elevated oil prices could lead to a 0.4 percentage point reduction in worldwide GDP growth next year.
Fitch's earlier projection anticipated an average oil price of USD75 per barrel in 2024 and USD70 in 2025. However, the current Middle East conflict has significantly altered these predictions. “Our scenario assumes that, due to supply restrictions, oil prices average USD120/bbl in 2024 and USD100/bbl in 2025,” it continued.
“Higher oil prices would dampen GDP growth in almost all the Fitch 20 (economies it forecasts), although the impact would largely dissipate in 2025,” Fitch said, stressing that the US, the Eurozone as well as Japan would see a 0.5 percentage point drop in growth in 2024.
The initial assumption also considered that the primary effects on major emerging market countries would be most pronounced in South Africa and Turkey.
“Russia, and to a much lesser extent Brazil, would see a positive impact due to the important role of oil production in these economies,” the statement highlighted.
Fitch Ratings suggests that elevated oil prices in 2024 would result in higher-than-anticipated inflation rates, with corrections expected in 2025. The agency anticipates a brief and partially offset impact on inflation, as lower-than-projected inflation rates are foreseen in 2025.
The agency's report outlined a scenario in which elevated oil prices could lead to a 0.4 percentage point reduction in worldwide GDP growth next year.
Fitch's earlier projection anticipated an average oil price of USD75 per barrel in 2024 and USD70 in 2025. However, the current Middle East conflict has significantly altered these predictions. “Our scenario assumes that, due to supply restrictions, oil prices average USD120/bbl in 2024 and USD100/bbl in 2025,” it continued.
“Higher oil prices would dampen GDP growth in almost all the Fitch 20 (economies it forecasts), although the impact would largely dissipate in 2025,” Fitch said, stressing that the US, the Eurozone as well as Japan would see a 0.5 percentage point drop in growth in 2024.
The initial assumption also considered that the primary effects on major emerging market countries would be most pronounced in South Africa and Turkey.
“Russia, and to a much lesser extent Brazil, would see a positive impact due to the important role of oil production in these economies,” the statement highlighted.
Fitch Ratings suggests that elevated oil prices in 2024 would result in higher-than-anticipated inflation rates, with corrections expected in 2025. The agency anticipates a brief and partially offset impact on inflation, as lower-than-projected inflation rates are foreseen in 2025.
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