Inflation Expected to Generate Major Crises Worldwide

 A woman holding her baby shops at a vegetable market amid the coronavirus disease (COVID-19) pandemic in Cairo, Egypt February 25, 2021. REUTERS/Mohamed Abd El Ghany
A woman holding her baby shops at a vegetable market amid the coronavirus disease (COVID-19) pandemic in Cairo, Egypt February 25, 2021. REUTERS/Mohamed Abd El Ghany
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Inflation Expected to Generate Major Crises Worldwide

 A woman holding her baby shops at a vegetable market amid the coronavirus disease (COVID-19) pandemic in Cairo, Egypt February 25, 2021. REUTERS/Mohamed Abd El Ghany
A woman holding her baby shops at a vegetable market amid the coronavirus disease (COVID-19) pandemic in Cairo, Egypt February 25, 2021. REUTERS/Mohamed Abd El Ghany

With the rise of inflation rates all over the world, the value of the foreign exchange reserves were affected in many countries, putting down the economies of emerging states, which mostly depend on imports to cover their daily consumption needs.

Given the economic developments in many emerging countries, including Egypt, experts told Asharq Al-Awsat that five major crises would result from inflation.

Those include the shortage of the US dollar, the dilemma of maintaining growth and not going into deflation (through attempts to address inflation by raising interest rates while attracting direct investments), and managing financial resources in a way that ensures the continued flow of goods and products, even in the most difficult circumstances, by expanding local production and increasing self-sufficiency in basic commodities, in parallel with long-term import contracts.

Another crisis is represented by the challenge to maintain employment rates, while the fifth pertains to the debt-to-GDP ratio.

Dr. Sheriff Henry, an expert on macroeconomics, believes that inflation “is one of the mechanisms that some countries use to export crises.”

He told Asharq Al-Awsat: “We are now in the time of exporting problems, to exploit them at the geopolitical and economic levels… Crises have become like a snowball since January 2020.”

According to Henry, the inflationary policies would lead to the decline in the countries’ foreign exchange reserves and their inability to provide hard currency to maintain the flow of goods to their markets.

He pointed, however, that the Gulf countries have large reserves, hence, “the effects on them will be minimal.”

For his part, Ahmed Moati, Chief Economist and CEO of VI Markets Egypt, noted that the new crisis was represented by employment, pointing to a change in the behavior of employees in the wake of the coronavirus pandemic.

He also highlighted that major central banks have changed rhetoric in their description of the crisis.

While they used to stress that there was no need to worry as inflation would be temporary, now they are increasingly mentioning a “huge and frightening inflation,” according to Moati.

For Ahmed Shukri Rashad, a university professor and economic advisor, inflation is likely to remain high in 2022 in developed and developing countries, to start receding in 2023 in light of contractionary monetary policies and a breakthrough in the supply chain crisis.



Oil Prices Ease as Traders Assess US Tariffs and OPEC+ Output Boost

A drone view shows a portion of the crude oil tank farm in Midland, Texas, US June 11, 2025. REUTERS/Eli Hartman/File Photo
A drone view shows a portion of the crude oil tank farm in Midland, Texas, US June 11, 2025. REUTERS/Eli Hartman/File Photo
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Oil Prices Ease as Traders Assess US Tariffs and OPEC+ Output Boost

A drone view shows a portion of the crude oil tank farm in Midland, Texas, US June 11, 2025. REUTERS/Eli Hartman/File Photo
A drone view shows a portion of the crude oil tank farm in Midland, Texas, US June 11, 2025. REUTERS/Eli Hartman/File Photo

Oil prices retreated on Tuesday, having climbed almost 2% in the previous session, as investors assessed the latest developments on US tariffs and a higher than expected increase to OPEC+ output for August.

Brent crude futures fell 12 cents, or about 0.2%, to $69.46 a barrel by 1043 GMT. US West Texas Intermediate crude lost 25 cents, or about 0.4%, to $67.68.

US President Donald Trump began telling trade partners on Monday that sharply higher US tariffs will start on August 1, though he later said that deadline was not 100% firm.

Trump's tariffs have raised uncertainty across the market and concerns that they could have a negative effect on the global economy and oil demand.

While prices seem to be pressured by OPEC+ unwinding its voluntary output cuts, tightness in middle distillates and Houthi attacks on cargo ships are supporting the market, said Rystad analyst Janiv Shah.

On Saturday the OPEC+ group comprising the Organization of the Petroleum Exporting Countries and its allies agreed to raise production by 548,000 barrels per day (bpd) in August, exceeding the 411,000 bpd increases in the previous three months.

Investors were bullish heading into the peak summer demand period in the United States, however, with data from the US Commodity Futures Trading Commission on Monday showing money managers raised their net-long futures and options positions in crude oil contracts in the week to July 1.

Once oil demand declines seasonally, the increase in OPEC+ exports will hit the market, raising downside risks to prices, HSBC analysts said in a note.

Analysts at Commerzbank expect the price of Brent to fall to $65 a barrel on the emerging oversupply in the autumn months.

The decision by OPEC+ removes nearly all of the 2.2 million bpd of voluntary cuts made by the group since 2023.

The producer group is set to approve an increase of about 550,000 bpd for September when it meets on August 3, according sources told Reuters, which would unwind all of the cuts.