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The BdE warns that the Israel-Iran war is the greatest risk for the financial sector

Date: May 20, 2024 Time: 09:17:09

The world economy has been conditioned in the last two quarters by the prolongation of the war between Ukraine and Russia, and the tensions in the Middle East, which have come to the fore this weekend due to the missile and drone attack by Iran. to Israel, although it has managed to avoid most of it. In this sense, the Bank of Spain (BdE) has warned that geopolitical risks emerge as the main threat facing the Spanish financial sector. According to the semiannual Financial Stability report, whose conclusions were finalized last Friday and, therefore, the latest offensive, the increase in hostilities could have a “significant” impact if it translates into greater uncertainty for activity.

“The market has not priced in the geopolitical uncertainty, proof of this is that the spreads remain compressed and do not value the risk that we see,” detailed the general director of Financial Stability of the organization. Although they point out that none of their effects have yet materialized, since the escalation remains contained, “they represent a source of uncertainty that is difficult to quantify.” Among the most immediate consequences would be a potential rise in inflation due to the possible increase in energy prices, as well as raw materials, impacting the cost of food and the transportation of goods. Added to this is the holding of elections of global relevance in countries during 2024, which is an additional factor to follow. “The analysis of the geopolitical situation requires continuing to carefully monitor tensions between China and the United States, with ramifications of particular importance for the entire Asia-Pacific region and for global trade in technological goods,” they point out.

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Puck Henry
Puck Henry
Puck Henry is an editor for ePrimefeed covering all types of news.

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