Mideast Instability: Could It Lead to Stagflation?
Protest in BahrainPolitical turmoil in the Middle East has powerful economic and financial implications, particularly as it increases the risk of stagflation, a lethal combination of slowing growth and sharply rising inflation. Indeed, should stagflation emerge, there is a serious risk of a double-dip recession for a global economy that has barely emerged from its worst crisis in decades.
Severe unrest in the Middle East has historically been a source of oil-price spikes, which in turn have triggered three of the last five global recessions. The Yom Kippur War in 1973 caused a sharp increase in oil prices, leading to the global stagflation of 1974-75. The Iranian revolution in 1979 led to a similar stagflationary increase in oil prices, which culminated in the recession of…
Related Topics: economy
source : www.realclearpolitics.com
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Submited at Tuesday, March 15th, 2011 at 9:00 pm on Politics by madison
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