Israel-Hamas conflict may cost global economy $2 trillion: Ernst & Young

Israel’s increasing military actions in Gaza could potentially escalate into a regional conflict casting a shadow over the global economy’s prospects including the risk of slowing economic growth and renewed increases in energy and food costs. The war may cost the global economy $2 trillion if the conflict further escalates, the New York Times reported on Wednesday, citing a top economist at Ernst & Young. Gregory Daco, the chief economist at EY-Parthenon, which is Ernst & Young’s global strategy consulting arm said that in a “worst-case scenario,” an expansion of military action in the Middle East could result in severe consequences for the world economy. This might include a moderate recession, a decline in stock prices, and a potential loss of $2 trillion, he said. Last week, the WTO warned that the conflict would have a “really big impact” on already weak global trade flows if it widened throughout the region. The Middle East holds significant importance for the world due to its role as a vital energy supplier and a crucial shipping route. The 1973 Arab-Israeli war serves as a stark illustration, as it resulted in an oil embargo and years of stagflation in industrialized economies. While various conflicts in the region have incurred a substantial human toll, their economic impact has sometimes been more contained. At least 9,061 Palestinians have been killed in the war, the Gaza Health Ministry said Thursday, without providing a breakdown between civilians and fighters. The death toll is without precedent in decades of Israeli-Palestinian violence. Over 1,400 people have died on the Israeli side, mainly civilians killed during Hamas’ initial attack, also an unprecedented figure. Nineteen Israeli soldiers have been killed in Gaza since the start of the ground operation. A suspected militant shot to death an Israeli reserve soldier driving near a West Bank settlement Thursday, the military and medics said. The air force has also continued its strikes on Gaza, the IDF said Thursday evening, adding that the aircraft struck several military headquarters used by senior Hamas officials among other targets belonging to the terror group. With inputs from agencies.