Top 4 threats for global economy in 2018
Team Veye | 18-Jan-2018
Nuclear War and cyber-attacks are the top manmade threats to international stability in 2018 as per World Economic Forum’s Global Risks Report. The situation could get aggravated further with Middle East instability & Oil and Gas price hikes as all these are inter-linked.
The risk of a nuclear war is imminent with North Korean Leader Kim Jong Un’s consistent testing of ballistic missiles and nuclear weapons despite strong opposition from prominent leaders of major powers across the world and US President Donald Trump’s pledge to exterminate North Korea in case of an attack. 2018 stands the highest chances to witness the economic and political frictions between major powers than any other years in the past.
This geopolitical friction is contributing to a spurt in the scale and expertness involved in the cyber-attacks. Especially, the Nuclear weapon systems of the major powers of the world like US, UK and other countries are highly vulnerable to cyber-attacks by state and non-state groups. The biggest reason for the same is the tenure during which these nuclear weapons were developed without keeping into account the potential cyber vulnerabilities that will come up in future with the advancement of computer technology. In addition, there are a few hundred million malwares being released every year and the number is just multiplying day on day. Trojans to steal data from banking platforms are easily available in the grey market for as low as $500. And, this cyber attack threat is looming large over all major sectors including nuclear weapon systems, economic system of a country and aviation industry just to name a few. The Wannacry Ransom ware attack on NHS, UK in May 2017 is a good example of the vulnerabilities of our system.
Instability in the Middle East is increasing risks to supply from key oil-producing areas. The five sensitive Crude Oil Sources — Iran, Iraq, Nigeria, Libya and Venezuela — continue to see supply disruption potential, with northern Iraq crude exports at risk due to an escalation of tensions between the (Kurdistan Regional Government), Baghdad and Turkey, while the U.S. has decertified the 2015 Iran nuclear deal in Oct 2017. Adding to these tensions, U.S. President Donald Trump last week refused to certify Iran's compliance over a nuclear deal, and a decision against Tehran is pending by the US Congress. This power struggle in the middle-east will surely have an impact on the oil supply from major oil producing countries and may contribute to international instability. To add to it is Islamic State of Iraq and Sysria(ISIS) is named as the top threat in countries mostly concentrated in Europe, the Middle East, Asia and the United States. A substantial number of these countries have endured deadly terrorist attacks claimed by the Islamic militant group. And, this threat continues to loom large.
To add to it, the world’s major oil producers have extended production cuts through to the end of 2018, in a bid to tackle a global glut of crude and keep prices soaring. Members of Opec, the oil cartel, and other major producers including Russia agreed that the curbs, which started in January 2017 and have lifted a barrel of Brent crude from $40 to more than $60 now, will continue for a further 6 months and will be reviewed in June 2018. On a macro-economic level, Oil price increases are generally thought to increase inflation and reduce economic growth. In terms of inflation, oil prices directly affect the prices of goods made with petroleum products. As mentioned above, oil prices indirectly affect costs such as transportation, manufacturing, and heating. The increase in these costs can in turn affect the prices of a variety of goods and services, as producers may pass production costs on to consumers. Oil price increases can also stifle the growth of the economy through their effect on the supply and demand for goods other than oil. Increases in oil prices can depress the supply of other goods because they increase the costs of producing them.
Although we cannot influence any of these areas as individuals but awareness around all these aspects can help us take informed decisions, plan and prepare us for any possible turmoil.
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