“Middle East Unrest: Dimon and Fink Fear Global Economic Fallout”

“Middle East Unrest: Dimon and Fink Fear Global Economic Fallout”

Ira Singh
07 Nov’23

In a joint statement, two influential figures in the world of finance, Jamie Dimon, CEO of JPMorgan Chase, and Larry Fink, CEO of BlackRock, have issued a stark warning about the ongoing Middle East crisis and its potential repercussions on the global economy.

In terms of the global economy, Larry Fink, chief executive of the world’s largest asset manager, BlackRock, said a combination of the Hamas atrocities of 7 October, Israel’s resultant attack on Gaza and Russia’s invasion of Ukraine last year had pushed the world “almost to a whole new future”.

In an interview with the Sunday Times, Fink said: “Geopolitical risk is a major component in shaping all our lives. We are having rising fear throughout the world, and less hope. Rising fear creates a withdrawal from consumption or spending more. So fear creates recessions in the long run, and if we continue to have rising fear, the probability of a European recession grows and the probability of a US recession grows.”

In a separate interaction, while agreeing with this prognosis, Jamie Dimon, the chair of America’s biggest bank, JP Morgan, added that the world is facing a crisis that is “arguably the most serious since 1938”.“What’s happening on the geopolitical front right now is the most important thing for the future of the world – freedom, democracy, food, energy, immigration,” he said.

The comments come three weeks after similar apocalyptic remarks from Dimon, who is one of the world’s best known financiers. Last month, he warned that it was “the most dangerous time the world has seen in decades”, with the escalating conflict potentially having “far-reaching impacts” on energy prices, food costs, international trade and diplomatic ties, according to information.

The negative Wall Street sentiment concerning the global economy is also being echoed elsewhere.

One of the reasons the conflict between Israel and Hamas is seen as posing a global economic threat is the world’s reliance on the region’s oil, which accounts for a third of the market. Economists often fear that spikes in the oil price can trigger global recessions.

The economy’s weak performance means the threat of recession is already hanging over the UK. Last week, the Bank of England said in its monetary policy report: “UK GDP is expected to have been flat in 2023 Q3, weaker than projected in the [Bank’s] August report. Some business surveys are pointing to a slight contraction of output in Q4 but others are less pessimistic. GDP is expected to grow by 0.1% in Q4, also weaker than projected previously.”

The Middle East crisis is now taking center stage as a significant concern for global economic stability. The world will be closely watching as efforts continue to address and resolve the complex issues in the Middle East, with the hope of averting a crisis that could negatively impact the global economy.