Arab Spring in Libya: Crisis for the World Economy
Though the world might not have watched the events in Tunisia or Egypt with much interest, Libya is certainly an eye-opener. As the Arab Spring spreads to Libya, it could be one of the first signs of a bigger political-economic crisis than previously thought.
The Potential Fuel Crisis
Effect on Other Economies
The Currencies and Commodities Firm Up
Emulating other times of crisis, precious metal soared on the back of increased buying. Silver beat 30-year record to touch the historical high of $33 per troy ounce on Friday, February 25. On the other hand, gold closed at $1,408 per troy ounce. Safe haven currencies, Swiss Franc and Yen gained 1.8% each. The Libyan uprising has particularly impacted the crude supplies to Europe. Consequently, Euro is constantly losing ground against other major currencies.
The Arab Spring has a global impact
In the wake of the Libyan crisis, key U.S. indices like Dow Jones Industrial Average, Nasdaq, and S&P 500 have taken a beating. The suppressed demand for fuel may not impact the U.S. at this juncture. The rising prices in the international market, though, may retard its economic recovery process.
Europe is already feeling the heat. This, combined with its own ongoing problems of high sovereign debts and slow economic recovery, has become a major cause of concern for the policymakers. J
apan’s industrial exports, which form a major part of the GDP, depend upon uninterrupted fuel availability and oil imports virtually form the lifeline of Japanese Economy. Its astronomical level of public debt (almost 200% of the GDP) and weak economic recovery put it in an even tighter spot.
Korea, being the 5th largest oil importer, is heavily dependent on the exports from Middle East to fuel its growth story. As it emerges from the recession, it is already struggling from inflation and experts believe that any further pressure on the fuel front can invite stagflation.
Other developing nations, like Brazil and India, are also not untouched from the international political events. These countries are already plagued by domestic inflationary conditions and rising fuel prices have further put a damper on their growth.
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