Middle East Unrest and Its Impact on World Trade
Middle East Unrest and Its Impact on World Trade
Middle East Unrest:
Middle East unrest or The Arab Spring is basically a term given to The Arab Revolution. It is a revolutionary wave of demonstration, protests and wars taking place in the Arab world that began in the late 2010. To date, rulers have been dethroned from power Tunisia, Egypt, Libya and Yemen. Civil uprisings have manifested in Bahrain and Syria, major protests have taken place in Algeria, Iraq, Jordan, Kuwait, Morocco and Sudan.
Instability in the Middle East is obviously nothing new, and while turmoil in nations such as Egypt, Bahrain, Iran, Libya, Algeria, and Yemen may set back those economies, a slowdown in regional growth is unlikely to spread elsewhere. The roughly two dozen countries that make up the Middle East and North Africa region—MENA, to economists—account for only about $2.5 trillion in GDP, combined. That 's one-fifth the size of the U.S. economy and barely 3 percent of world output. But because this region is abundant with natural resources without which life today is unimaginable- the Middle east unrest does concern everyone out there and especially parties related to trade.
Relationship between regional unrest and world trade:
World trade in general can be affected by world events such as war and civil unrest. The influences can be direct and indirect, and they often occur in chain reactions. The social uncertainty and fear generated by the unrest in the Middle East countries affected markets directly as they caused many investors in many countries to trade less and to focus on stocks and bonds with less risk. An example of an indirect influence on markets is the announcement of a new military venture by a country in response to the outbreak of civil unrest or conflict abroad. This announcement likely would cause the price of the stocks of military equipment and weapons manufacturers to rise due to an expected increase in defense contracts, which in turn can raise the value
Middle East Unrest:
Middle East unrest or The Arab Spring is basically a term given to The Arab Revolution. It is a revolutionary wave of demonstration, protests and wars taking place in the Arab world that began in the late 2010. To date, rulers have been dethroned from power Tunisia, Egypt, Libya and Yemen. Civil uprisings have manifested in Bahrain and Syria, major protests have taken place in Algeria, Iraq, Jordan, Kuwait, Morocco and Sudan.
Instability in the Middle East is obviously nothing new, and while turmoil in nations such as Egypt, Bahrain, Iran, Libya, Algeria, and Yemen may set back those economies, a slowdown in regional growth is unlikely to spread elsewhere. The roughly two dozen countries that make up the Middle East and North Africa region—MENA, to economists—account for only about $2.5 trillion in GDP, combined. That 's one-fifth the size of the U.S. economy and barely 3 percent of world output. But because this region is abundant with natural resources without which life today is unimaginable- the Middle east unrest does concern everyone out there and especially parties related to trade.
Relationship between regional unrest and world trade:
World trade in general can be affected by world events such as war and civil unrest. The influences can be direct and indirect, and they often occur in chain reactions. The social uncertainty and fear generated by the unrest in the Middle East countries affected markets directly as they caused many investors in many countries to trade less and to focus on stocks and bonds with less risk. An example of an indirect influence on markets is the announcement of a new military venture by a country in response to the outbreak of civil unrest or conflict abroad. This announcement likely would cause the price of the stocks of military equipment and weapons manufacturers to rise due to an expected increase in defense contracts, which in turn can raise the value
References: * http://agmetalminer.com/2011/02/24/what-does-middle-east-unrest-hold-in-store-for-the-global-economy/ * http://www.elitetrader.com/vb/showthread.php?threadid=215856 * http://finance.fortune.cnn.com/2011/03/01/oil-fear-trade-how-middle-east-unrest-could-lead-to-lower-prices/ * http://www.taylorwessing.com/news-insights/details/the-butterfly-effect-is-middle-east-unrest-bad-for-business-2011-07-14.html * http://internationalbusiness.wikia.com/wiki/Yemen%27s_Political_Unrest_and_Its_Effect_on_Business * http://www.princeton.edu/~gluciani/pdfs/Chapter%20in%20Fawcett.pdf * http://www.bloomberg.com/news/2012-10-24/middle-east-unrest-a-boon-to-elbit-systems-beating-defense-peers.html