Geopolitical Jitters May Dictate Course of World Economy

Source: Bloomberg

2012 was a year when politics at times trumped economic fundamentals, from worries about a break- up of the euro zone to anxiety about U.S. budget policy. In 2013, security concerns may do the same thing.

In the Middle East, the U.S. and Israel are on a potential collision course with Iran over that country’s nuclear program – – a clash that could roil oil markets throughout the year. The region also is racked by fighting in Syria that threatens to escalate and spread the longer it goes on. In Asia, a still- unresolved territorial dispute between China and Japan already has undercut trade ties, hurt companies including Toyota Motor Corp. (7203) and contributed to Japan falling back into recession.

“The uncertainty that is out there with respect to Iran, as well as other parts of the world, is something that is very, very real,” said retired Navy Admiral Michael Mullen, a former chairman of the U.S. Joint Chiefs of Staff. “The global economic impact of another war in that part of the world would be pretty draconian.

Read More: Bloomberg


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