US, Iran conflict may send oil prices spiraling
Leading credit rating agency, Moody’s Investors Service, has stated, that the recent escalation in US-China tensions has “clouded” the global economic outlook.
The rating agency said this in its latest Global Macro Outlook obtained by New Telegraph.
“If the tensions drag on or escalate, they will leave a lasting impact on the global economy,” Moody’s stated. “Also, the US threat to impose tariffs on all imports from Mexico is a reminder of the uncertainty of US trade policy.
“Secondly, a worsening of tensions between the US and Iran could tip an already delicate balance in the Middle East, potentially sending oil prices soaring and further complicating economic decisions in an already uncertain environment.”
Moody’s also points out that, years after the British electorate voted to leave the European Union (EU), the UK’s path toward Brexit still remains unclear.
“The recent trade and geopolitical developments could put the economy at risk if they result in a significant retreat of global financial markets and an abrupt tightening of financial conditions. In the event of a significant global deceleration, advanced industrial G-20 economies have limited monetary and fiscal policy space for stimulating global aggregate demand,” the rating agency said.
“Nevertheless, the prevailing accommodative bias among global central banks supports benign financial conditions, stimulus measures in China remain substantial and domestic demand in the US and core euro area economies continues to be robust. Together, these factors will likely provide a counterbalance to the adverse impact of increased trade frictions and uncertainty.”
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