Prof. Nouriel Roubini on Stagflation Risks Stemming from Political Unrest in the Middle East
The upheaval in Tunisia and now Egypt has important economic and financial implications. About two-thirds of the world's proven oil reserves and almost half of its gas reserves are in the Middle East; geopolitical risk in the region is thus a source of spikes in oil prices that have global consequences.
Three out of the past five global recessions have followed a Middle East geopolitical shock that led to a spike in oil prices. In the other two global recessions, oil prices, also played a role. The Yom Kippur ware of 1973 triggered a sharp increase that led to a global stagflation - recession cum inflation - of 1974-75. The Iranian revolution in 1979 led to a similar stagflationary rise in oil prices that triggered the 1980 recession (a double-dip recession in the US in 1980 and 1982)
The upheaval in Tunisia and now Egypt has important economic and financial implications. About two-thirds of the world's proven oil reserves and almost half of its gas reserves are in the Middle East; geopolitical risk in the region is thus a source of spikes in oil prices that have global consequences.
Three out of the past five global recessions have followed a Middle East geopolitical shock that led to a spike in oil prices. In the other two global recessions, oil prices, also played a role. The Yom Kippur ware of 1973 triggered a sharp increase that led to a global stagflation - recession cum inflation - of 1974-75. The Iranian revolution in 1979 led to a similar stagflationary rise in oil prices that triggered the 1980 recession (a double-dip recession in the US in 1980 and 1982)
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