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What’s Israel-Hamas war’s impact on global economic outlook?

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After indicating increased optimism about controlling global inflation brought on by the pandemic and Russia’s invasion of Ukraine in 2022, the start of a war in the Middle East may force central bankers to battle fresh inflationary trends and inflict a hit on economic confidence.

Israel on Sunday officially declared a state of war after a surprise attack by Hamas a day earlier, resulting in hundreds of deaths adding to the sense of global instability caused by Russian military actions almost 20 months ago.

So far, the impact of the Israel-Gaza war on global inflation remains unclear as it depends on how long the conflict lasts, how intense it becomes, and whether it spreads to other parts of the region.

“It’s too early to say what the implications may be, though oil and equity markets may see immediate fallout,” Agustin Carstens, general manager of the Bank for International Settlements, said in a presentation to the National Association for Business Economics (NABE).

However, the war has the potential to add an unpredictable set of dynamics to a weakening global economy.

Additionally, it may also affect US markets that are still adjusting to the possibility that the Federal Reserve would keep interest rates high for longer than many investors had anticipated, Reuters reported.

“Any source of economic uncertainty delays decision-making, increases risk premia, and especially given that region…there is an apprehension about where oil is going to open,” said Carl Tannenbaum, chief economist with Northern Trust.

“The markets will also be following what the scenarios are looking like,” he said, and whether, after decades of instability in the Middle East, this outbreak of violence evolves differently.

“The question will be is this iteration something that will throw the long-term equilibrium out of balance?”

That and related issues will likely vault high on the agenda of global financial leaders gathering this week in Morocco for meetings of the International Monetary Fund (IMF) and World Bank to take stock of a global economy that remains in a deep state of flux from the pandemic and rising trade tensions.

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Business

Irfan Siddiqui meets with the PM and informs him about the Senate performance of the parliamentary party.

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The head of the Senate’s Foreign Affairs Standing Committee and the PML-N’s parliamentary leader paid Prime Minister Muhammad Shehbaz Sharif a visit in Islamabad.

Senator Irfan Siddiqui gave the Prime Minister an update on the Parliamentary Party’s Senate performance.

Additionally, Senator Irfan Siddiqui gave the Prime Minister an update on the Senate Standing Committee on Foreign Affairs’ performance.

He complimented the Prime Minister on his outstanding efforts to bring Pakistan’s economy back on track and meet its economic objectives.

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Business

SIFC Increases Direct Foreign Investment: Investment in the Energy Sector Rises by 120%

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The Special Investment Facilitation Council is intended to help Pakistan’s energy sector attract $585.6 million in direct foreign investment in 2024–2025. The amount invested at the same time previous year was $266.3 million.

This is a notable 120% rise, mostly due to investments in gas exploration, oil, and power. Such expansion indicates heightened investor confidence and emphasizes the development potential in important areas.

The State Bank reports that foreign investment in other vital industries has increased by 48% to $771 million.

This advancement is a blatant testament to SIFC’s efficient investment procedure and quick project execution.

The purpose of the Special Investment Facilitation Council is to establish Pakistan as an investment hub by aggressively promoting regional trade and investment in the energy sector and other critical industries.

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Business

Discos report losses of Rs239 billion.

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When compared to the same period last year, the data indicates that discos have decreased their losses in the first quarter of the current fiscal year.

The distribution businesses recorded losses of Rs239 billion in the first three months of the current fiscal year, a substantial decrease from the Rs308 billion losses sustained during the same period the previous year.

Additionally, the distribution businesses’ rate of recovery has improved. It has increased to 91% in the first quarter of this year from 84% in the same period last year, indicating success in revenue collection.

Regarding circular debt, the Power division observed a notable change. Last year, between July and October, the circular debt grew by Rs301 billion. Nonetheless, this year’s first four months saw a relatively modest increase in circular debt, totaling about Rs11 billion.

These enhancements show promising developments in the electricity sector’s financial health in Pakistan, where initiatives are being made to accelerate recovery rates and slow the expansion of circular debt.

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