Economic Weekly: Active military conflict breaks out in Middle East
- The week starts with heightened uncertainty amid active conflict in the Middle East which began on Saturday. When you don’t know what to expect, you can at the very least expect volatility in global financial markets. Financial markets today are likely to open in true risk-off nature – equities and commodity currencies lower, safe-haven currencies and bonds higher (yields lower), and anticipate a sharp increase in oil prices.
- The joint operation from the US and Israel on Iran, and subsequent Iranian retaliation across the Middle East has plunged the region into chaos. Iran’s supreme leader has been killed in the strikes, but it remains unclear what that means for the future of the regime. Developments in the Strait of Hormuz will be integral to oil prices, and a closure would be unprecedented. Shipment through this chokepoint accounts for roughly 20% of global oil trade.
- Initial impacts for New Zealand will be contained to financial market moves, but we are wary for what this may mean for the near-term outlook for inflation. It remains too early to make any concrete calls, but the risks are clearly skewed to the upside. For now, our thoughts are with everyone caught up in the conflict.
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Mark Smith
Senior Economist
Mark joined ASB in 2017, with over 20 years of public and private sector experience working as an economist in New Zealand and the UK.
His resume includes lengthy stints at ANZ and the Reserve Bank of New Zealand, and he has also worked at the Bank of England, HM Treasury and the New Zealand Transport Agency. Mark's areas of specialisation include interest rate strategy, macro-economic analysis and urban economics.
Born and bred in the Waikato, Mark studied at Waikato University where he graduated with a Master of Social Sciences, majoring in Economics.
Mark's key strengths are the ability to use his extensive experience, inquisitive nature, analytical ability, creativity and pragmatism to dig a little deeper and to deliver common sense solutions to tackle complex problems.
When not at work Mark likes to travel, keep fit and spend time with his friends and family.
- Email: Mark