UNCTAD: Strait of Hormuz Reopening Doesn't End Global Economic Shock
Quick Look
- UNCTAD reports that the reopening of the Strait of Hormuz, while positive, will not end the global economic shock.
- The impact on transport and food systems will persist longer than on energy markets, affecting 61 vulnerable economies.
AI-generated summary
Why It Matters
The Strait of Hormuz is a critical chokepoint for global oil and grain shipments. Its reopening follows a period of heightened tensions.
GENEVA, June 30. /TASS/. The gradual resumption of shipping through the Strait of Hormuz does not mean the end of the economic shock for the global economy, as the impact of the crisis on transport and food systems will be felt much longer than on energy markets, a report on the situation around the Strait of Hormuz published by the United Nations Conference on Trade and Development (UNCTAD) stated.
"The first point is that the shock does not end with the reopening [of Hormuz], no matter what the headlines say," said UNCTAD spokesman Marcelo Risi, who presented the report at a briefing in Geneva.
According to him, reopening the strait is a "necessary but insufficient" condition for restoring trade, as supply chains require time to adjust, and shipping rates and prices remain stagnant.
According to the organization's report, 61 economies dependent on both oil and grain imports remain the most vulnerable. These include 35 of the least developed countries and 26 small island developing nations. For these countries, continued high costs for fuel, shipping, and food will put additional pressure on public finances and household budgets.
Earlier, Ali Bahraini, Permanent Representative of the Islamic Republic to the UN in Geneva, confirmed the opening of the Strait of Hormuz for commercial vessels and international shipping.
Open Questions
- How long will supply chains take to adjust?
- What specific measures will vulnerable economies take?
