SINGAPORE
Just as the world economy was stabilising after its worst performance in a decade, a US airstrike in Iraq that killed one of Iran’s most powerful generals is a jolting reminder of how fragile the outlook remains. A tentative trade agreement between the US and China had buoyed expectations that global growth would start to rebound this year. Business confidence has slowly been improving as key manufacturing gauges show signs of bottoming out.Now, the US-Iran flare-up could nip any positive sentiment in the bud. A sustained rise in oil prices – futures in London and New York surged by more than 4% on the news – would hurt economies that rely on energy imports, and suppress consumer demand. “The situation reminds me of the game of Whack-A-Mole,” said Wellian Wiranto, an economist at Oversea-Chinese Banking Corp in Singapore. “Just when the market started to be relieved that trade war escalation risk has subsided, another risk-off event pops up seemingly from nowhere.”—Agencies
