The impact of wars on the global economy
Hello friends of Project Hope, I hope you are well, happy weekend to all. Today I want to share my opinion regarding something that unfortunately has occurred since the beginning of society, and has to do with wars and, above all, how they affect the global economy.
As I already said, unfortunately wars have been a constant in the history of humanity, and their impact on the global economy is significant and affects many areas. Armed conflicts not only affect the nations directly involved, but also impact international trade, financial markets, and global supply chains. We have been able to see it clearly in the war between Russia and Ukraine.
Let's start by talking about the destruction of Infrastructure and Loss of Human Capital. This is one of the most immediate and visible consequences of wars and the destruction of essential infrastructure such as bridges, roads, factories, estates, farms and hospitals occurs.
This devastation not only reduces a country's productive capacity, but also imposes enormous reconstruction costs. Furthermore, the loss of human life and forced displacement of populations cause a reduction in human capital, negatively affecting the workforce and long-term economic growth.
All of this has a direct impact on International Trade, why?, simple, wars can interrupt trade routes and cause economic sanctions, affecting the flow of goods and services worldwide. For example, a conflict in an oil-producing region, as has occurred not only with the war between Russia and Ukraine, but also with Israel's invasion of Gaza, can cause significant volatility in crude oil prices, which impacts global energy costs.
In turn, this can lead to an increase in commodity prices, which in turn raises inflation and reduces the purchasing power of consumers around the world. Something that logically each and every one of us is clearly seeing.
We must also highlight the impact on the Financial Markets, these are extremely sensitive to the uncertainty and volatility generated by wars. And I'm not only talking about the traditional market, but also the Crypto market, which is affected by these situations.
The reasons? So, investors tend to withdraw their funds from affected economies and seek refuge in safer assets, such as gold or hard currencies. That is why gold, when the conflict between Israel and Gaza had just begun, the price of gold rose a lot, which is what I was talking about at the time.
This can cause falls in the stock markets and a depreciation of the currencies of the countries in conflict, increasing economic instability. And lastly, and no less important, all this produces increase in public spending and debt. A clear example of this is that the United States, thanks to its current management with the tendency towards wars, has incurred an unprecedented increase in debt, which is affecting the global economy, for the simple reason that the American dollar is the most important currency globally, at least until now.
This is part of the things I could say, and of course, there is much more than this, but I would like to know what you think about it. I read them in the comments.
Whenever I hear the word war, I am not always happy because I know that it always affects economy and not even only economy but a lot of innocent souls out there also
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