Economist: Conflict in Middle East Will Have Impact on Serbian Economy

Ljubodrag Savic (YouTube screenshot)

Ljubodrag Savic, a professor at the Belgrade Faculty of Economics, said on March 4 that the conflict in the Middle East could have more momentous economic consequences than the global economic crisis of 2008, and that rising oil and natural gas prices would drive price increases in all sectors.

Savic told the Serbian Broadcasting Corporation that Serbia would inevitably be affected, and that fuel prices, due to be announced on March 6 for the next seven days, would be the first test. He said the closure of the Strait of Hormuz, which accounted for the transport of 20 percent of the world's oil trade, would not have a dramatic impact at present -- though it has caused a significant disruption in global markets -- as major countries had commodity reserves to fall back on.

However, he said, if the crisis should last, there is no doubt that this will become a problem on a global scale. He noted that global powers' reactions were already evident, recalling that China had appealed directly to Iran not to close the strait, knowing how crucial fuel passage stability is to its economy.

The possibility of fuel shortages is of particular concern and would be the bleakest scenario according to Savic. With respect to geopolitical consequences, Savic said Russia may entrench its positions, especially on the European market.