Political outcomes aren't likely to impact the economy too much

Global economic trends are likely to be driven by AI and tech innovations for climate action, not prevailing uncertainties

- SUDIPTO MUNDLE

With 2024 around the corner, it is a good time to take stock of the prevailing political uncertainties around the world and their possible economic consequences. It is a vast subject. In this short column, I will touch on only a few key political fault-lines and share some speculations on their possible economic consequences.

The war in Gaza is today’s leading political fault-line. The brutality of the Hamas-led attack of 7 October now pales into insignificance compared to the genocidal Israeli response. With over 21,000 persons already dead, half of them children, and 50,000 injured, the unspeakable human tragedy in Gaza continues relentlessly. With virtually no sanitation and supplies of food, water and fuel reduced to a trickle by the Israeli blockade, starvation and disease could eventually kill more people than the bombing.

But geopolitics is a remarkably cynical space. The US could pull the plug and stop the war in no time, but it won’t. Despite civil society protests around the world, no government will intervene to stop the war unless its vital interests are affected. Even Iran is holding back, its goal of upending the Abraham Accords before Saudi Arabia signed on having already been achieved, at least for now. But there is a grave risk that the involvement of Iran’s allies, especially the disruption of Red Sea flows of oil and other commodities, could lead to a widening conflict with significant global economic consequences. In particular, the prices of oil and gas could spike and the world could be hit by another hydrocarbon price shock.