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The double shock and boycott

Nov 18,2023 - Last updated at Nov 18,2023

The global stage has witnessed significant developments and crucial transformations over the past twenty months linked to regional and international conflicts. These developments have manifested in sharp increases in oil and basic commodity prices, constituting a "double shock" that has profoundly affected national economies and international relations. Given the correlation between the surge in oil and commodity prices and ongoing conflicts worldwide, it opens up vast and intricate perspectives for understanding market dynamics and the effects of geopolitical events on individuals' lives and societies.

In this context, we observe that the "double shock" has begun casting its shadow on the Jordanian economy, posing new challenges for the state, society and even individuals. Its impact has become evident in people's lives and their consumption behaviours, as affirmed by a recent report from Al Rai newspaper a few days ago. The report confirmed that foodstuff demand has declined by over 60 per cent since the onset of the war on Gaza. The report attributes this decrease in demand to several factors, including developments in the events of the Gaza war, which have impacted the psychological well being of Jordanian families, in addition to the citizens' reduced purchasing power. In a conversation with friends who asked about the accuracy of this percentage, my response was to inquire whether their personal demand for food items decreased after the start of the war on Gaza, to which they answered affirmatively. This implies that the report accurately reflected the actual behaviour of Jordanian consumers.

The latest release of the World Bank's "Commodity Markets Outlook" warns that despite the global economy being in a much better position than it was in the 1970s to face a significant oil price shock, recent conflicts in the Middle East and disruptions caused by the Russian invasion of Ukraine may push global commodity markets into uncertainty. The report reviews the average oil prices, expecting them to reach $90 per barrel in this quarter before decreasing to $81 next year. It also anticipates a 4.1 per cent decline in commodity prices next year, with expectations of lower prices for agricultural and base metal commodities. Current effects of the conflicts indicate that global markets have not been significantly affected so far, with oil prices rising by 6 per cent. In this context, the report outlines three possible scenarios for the escalation of conflict, emphasising that the impacts will depend on the extent of oil supply disruptions.

At the same time, the report warns of declining prospects for commodity prices in case of conflict escalation, highlighting the need to contain the effects of this conflict and limit its scope. In this context, policymakers should exercise caution, especially in the face of the global economic landscape that has witnessed significant shocks in recent years.

The report also points to the improved resilience of global economies to absorb oil price shocks due to transformations these economies have undergone. It emphasises the importance of diversifying energy sources and investing in renewable energy to reduce the impacts on the global economy.

The aforementioned Al-Rai report indicated that some traders had confirmed a noticeable decline in demand for foodstuffs since the start of the war on Gaza, attributing it to reduced purchasing power and developments in the Gaza war. This might explain part of it through the boycott of some imported goods.

Regarding the boycott, it is explained as a reaction to the decisions of Western countries and their clear bias towards Israel. This has significantly affected the psychology and consumption behaviour in the Middle East, including Jordan. This has been expressed through anger and protests, reflecting feelings of injustice and discontent. Citizens have responded with economic reactions to manifestations of bias, calling for the boycott of products or services associated with biased countries. Hence, we find a change in people's priorities in their daily lives, as individuals have found themselves reassessing their consumption choices and leaning towards supporting local products and services or those that align with their political positions.

In conclusion, the behaviour of boycott can be viewed with understanding by some individuals and communities, while others may perceive it negatively. From a positive perspective, some see boycott as a means of expressing personal principles and values, and as an effective way to support causes deemed fair and important. On the negative side, some view boycotts in terms of potential job losses, missed business opportunities and investments that could negatively impact the economy.

The world needs to hear the voices of the wise and the silent majority to establish peace and justice, suppress the voices of advocates of war, and promote a culture of dialogue and cooperation among peoples. This includes achieving understanding and tolerance to build a world based on the values of justice, peace, and collaboration, rather than escalation and conflict.

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