Today the top trends forecaster in the world predicted the Iran War global economic destruction will get much worse.
April 15 (King World News) – Gerald Celente: PUBLISHER’S NOTE: The socioeconomic and geopolitical impact of the Iran War is global. Also, as we have forecast, the United States and Israel are partners in this war and there will be no peace deal unless Israel ends its war against Lebanon and retreats to its borders… which we forecast will not happen.
Therefore, the Iran War will continue, and bad economic conditions will become much worse. Here are the latest impacts of war.
IRAN WAR BRINGS “ACUTE STRAIN” TO CHINA’S INDUSTRIES
As the Iran War began, China seemed well-prepared to weather its impacts. It had diversified its energy sources, banked trillions of dollars’ worth of gold reserves and foreign exchange, and deepened trade relationships with nearby Asian partners.
However, six weeks into the war, the country’s industrial supply chains are showing “acute strain,” the Financial Times reported.
Key supply chains have been disrupted, either cutting back essential materials or forcing them to reroute, raising shipping costs. Last month, to cope with the upset, Chinese factories raised their product prices for the first time since 2022.
That upset could be worse than in the aftermath of the COVID War, according to Cameron Johnson at TidalWave Solutions, a supply chain consulting firm.
China typically gets a third of its oil and 25 percent of its gas from the Middle East, which also is a key supplier of methanol, sulfur, and a range of other chemicals.
“It’s all the raw inputs, particularly anything that might be imported or where there’s already tight supply,” he told the FT. “It’s scarcity, supply tightness, a lack of visibility when things will be turned back on.”
In China, the price already has doubled for some polyethylenes, which are needed to make everything from toys to plastic bags, Johnson noted. Some forms of carbon fiber, crucial in cars and a range of consumer goods, are up 20 percent in cost.
The shortages are causing Chinese officials to re-evaluate the effectiveness of President Xi Jinping’s years-long effort to make the country as self-sufficient as possible to withstand external upsets such as the current one.
The government must “abandon wishful thinking” that it has adequately fortified itself and begin to take additional steps to weather worst-case scenarios, former planning official Peng Shaozong, who is now president of the China Society for Economic Reform, wrote in a frank assessment last month…
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IRAN WAR WILL LEAVE LONG-TERM “SCAR’ ON INVESTMENT MARKETS
Bond yields and commodity prices are likely to remain at wartime levels even after the Strait of Hormuz reopens and the hot war stops, analysts have told the Financial Times.
Damage to Gulf states’ ports and production facilities and Iran’s greater control over the waterway will drag on any recovery, they said.
“It goes beyond [reopening] the strait,” James Vokins, in charge of investment-grade bonds at Aviva Investors, said to the FT. “There would be long-lasting scar tissue that would need a higher risk premium” in those markets, even after a ceasefire is in place, he added.
“Even if the ceasefire [is] lasting, the conflict was long enough, and leaves enough damage, that any reasonable macro scenario as of today looks meaningfully worse than the pre-conflict outlook,” Bill Papadakis, chief strategist at Lombard Odier, agreed in an FT interview.
Markets have tanked as the war intensified and rallied on hints of peace, leaving investors uncertain about what the future will bring. Bond yields rose on assumptions that central banks will have to boost their interest rates to bring down inflation that the war will cause. The yields remain elevated.
In the U.S., the yield on the two-year treasury note, a barometer of interest-rate expectations, is up 0.2 percent since the war began. In Germany, Italy, and the U.K., the two-year yield has jumped 0.5 percent.
The dollar and U.S. Treasury securities are no longer seen as safe harbors. “Donald Trump’s alienation of allies and the ballooning national debt, made worse by the war, have lifted risk levels on those assets,” the FT reported.
“A lot of people come to us and say they like Switzerland’s stability,” Andrew Jackson, chief investor at Vontobel, said in an FT interview. “The U.S. economy is still the dominant economy in the world, but the confidence and predictability are definitely lower now.”
The war has persuaded the DoubleLine investment firm to diversify away from dollar-based assets, bond portfolio manager Bill Campbell told the FT. “We’re looking at adding to our emerging markets allocation,” he said. “That is a trend that is going to stick with us. The volatility we saw in March makes it very attractive.”
GULF STATES’ OIL OUTPUT COLLAPSED IN MARCH
Oil production among major Persian Gulf exporters crashed in March as the region descended into war, according to OPEC data released on 13 April.
Iraq’s output fell the most, dropping by 61 percent, from 4.2 million barrels a day before the war to an average of 1.6 million last month. Ninety-five percent of the Iraq government’s revenue comes from shipping oil.
Kuwait’s production dropped by 53 percent and the United Arab Emirates by 44 percent.
Saudi Arabia’s flows were cut by 23 percent from 10.1 million barrels to 7.8 million. The nation was rerouting oil through an overland pipeline to the Red Sea, sending seven million barrels daily that way. However, the line was damaged by an Iranian attack, cutting its capacity by 700,000 barrels, the state-owned news agency said.
OPEC as a group lost 27 percent of its normal daily oil output in March, cutting it from 28.7 million barrels to 20.8 million.
Gulf states have largely shut their production because Iran has effectively shut the Strait of Hormuz and the countries’ storage facilities are now full.
Once the war ends, the nations will need months to restore their output to full capacity, Sheikh Nawaf al-Sabah, CEO of Kuwait Petroleum Corp., told a conference on 24 March.
“We have resilient reservoirs that bring out quite a bit of production immediately – within a few days,” he said. “The bulk of it will come within a few weeks, and then the full production will come within three or four months.”
Iran’s oil production is only about 5 percent smaller, down from 3.24 million barrels to 3.06 million, OPEC reported. Iran has continued to send tankers through the Hormuz strait throughout the war.
However, Donald Trump has now ordered the U.S. Navy to block Iran’s ports after a day of peace talks on 12 April failed to produce any result. As of 10 a.m. on 13 April, no ships are to enter or leave any Iranian port.
The new escalation sent oil prices briefly back up over $100 on 13 April, then back down below $100 as market fundamentals were re-examined and rumors circulated that Iran and the U.S. are continuing to communicate.
IRAN WAR SLASHES DUBAI PROPERTY SALES BY 30 PERCENT
Dubai’s residential real estate market is another casualty of the Iran War.
Known as a center of luxury, the city that also is one of the United Arab Emirates saw 17,027 home sales in February. The war began on 28 February and from 2 March through 29 March, transactions numbered 11,828, a month-on-month decline of 30.5 percent, the Anadolu news service reported.
The value of the sales fell even more, falling 36 percent from $16.53 billion to $10.58 billion in 30 days.
The emirate’s real estate stock index dove 21.3 percent last month.
Buyer demand for the properties may be far less than the sales figures show, according to Bayram Tekce, chair of the Real Estate Services Exporters Association, told the Financial Times.
The empty malls and silent streets have forced sellers to offer steep discounts and other incentives to close sales, he added. Actual demand may have plunged as much as 70 percent compared to pre-war times and the full extent of the pullback will become apparent only in the months ahead, he added.
Dubai’s prospective property buyers are in a cautious, “wait-and-see” mode, Burak Ustaoglu, CEO of real estate consulting firm Wovenint, told the FT. Properties that are part of long-term construction projects are selling when developers offer lower down payments and longer payment plans, he said.
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