April 7: Impact of US-Iran War on International Economy, Financial Markets, and Livelihoods

The Middle East war has led to a global oil shortage, with Vietnam's consumer price index (CPI) in March reaching its highest level for the same month in five years. According to Shen Hsien-yu, a Taiwanese businessman in Vietnam, the manufacturing industry has been severely impacted by soaring shipping costs, yet orders have increased due to customers rushing to build inventory, leading to a wait-and-see attitude amid future uncertainties. Vietnam's General Statistics Office announced on April 4 that the country's CPI in March rose by 1.23% from the previous month, influenced by surging global fuel costs and rising construction material prices. The March index also increased by 4.65% year-on-year, marking a five-year high for the month. AirAsia, Southeast Asia's largest low-cost airline, announced on April 6 that it would increase ticket prices by up to 40% and suspend some routes to mitigate the impact of the Iran war, reducing its total flights by about 10% so far. AirAsia X, headquartered in Malaysia, operates flights to over 150 destinations across 25 countries. Sri Lanka announced on April 6 another increase in liquefied petroleum gas (LPG) prices by nearly a quarter, primarily due to rising global prices caused by the Iran war. This follows an 8% price hike last month. A private company with about a quarter of Sri Lanka's LPG market share increased retail prices by 23%, from 4630 rupees (approximately 18.08 US dollars) to 5700 rupees. During the Easter period, fuel prices in Germany continued to climb, with diesel prices hitting a historical high. As existing fuel price control measures showed no significant effect, the German government is considering a new round of relief measures after the holiday, including direct cash subsidies, to alleviate the burden of fuel costs on the public. According to data from the German Automobile Club (ADAC), the national average diesel price on Easter Monday (April 6) rose to about 2.48 euros per liter (approximately 91 New Taiwan Dollars), an increase of over 6 euro cents from the previous day, setting a new historical record. The Iran conflict has stalled diplomatic interactions between Brazilian President Luiz Inácio Lula da Silva and US President Donald Trump, forcing a postponement of a planned March visit to Washington, and leading to a deadlock in agricultural tariff negotiations and market access issues. Soaring energy prices have directly impacted Brazilian livelihoods. Diesel prices rose by 45% in just 11 days, prompting the government to implement emergency tax cuts and export surcharges to curb inflation. O Globo noted that the war could also influence the direction of Brazil's October general election this year. JPMorgan CEO Jamie Dimon stated in his annual letter to shareholders that while the US economy has shown 'resilience,' the outbreak of war in Iran has caused volatility in global energy markets and could lead to renewed inflationary pressures. Dimon also warned that if inflation persists, the US Federal Reserve (Fed) might be forced to keep interest rates high for a longer period, posing risks to the overall economy and financial system. The International Monetary Fund (IMF) is expected to release its global economic outlook forecast next week; Managing Director Kristalina Georgieva stated in an exclusive interview with Reuters on April 6 that the Middle East war would push up inflation and slow global economic growth. This war has caused the most severe disruption to global energy supply in history, with millions of barrels of oil production halted due to Iran's blockade of the Strait of Hormuz. One-fifth of global oil and gas transportation passes through the Strait of Hormuz. International Energy Agency (IEA) Executive Director Fatih Birol predicted that the Middle East war-induced global energy crisis would accelerate the development of renewable energy, nuclear power, and electric vehicles. However, he also warned that if the Strait of Hormuz remains closed, a 'Black April' could occur. He said, 'If the Strait (of Hormuz) remains closed for the entire month of April, the loss of crude oil and petroleum products will be twice that of March.' He also pointed out that this waterway is an important transportation channel for fertilizers. (Edited by Yang Chao-yen) 1150407