Possible Revival of Inflation Crisis Due to Middle East Conflicts
The IMF warns from the escalating Middle East conflicts that could trigger inflation and disrupt planned interest rate cuts, impacting the global economy.
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In its latest World Economic Outlook report, The International Monetary Fund (IMF) has raised concerns that an escalation in the ongoing conflict in the Middle East could potentially lean to an inflationary crisis and disrupt the anticipated decline in interest rates. Such disruptions could negatively impact global economic growth. The IMF also noted that, despite high interest rates, global economic activity has shown unexpected resilience since October 2023, with employment and income levels performing better than anticipated.
Impact of Geopolitical Tensions on Commodity Prices
In this report, the IMF expressed concerns over a possible surge in commodity prices triggered by increased geopolitical tensions in the Middle East. This surge could hinder the current process of disinflation and postpone the easing of central bank policies, which would have negative repercussions for global economic stability.
Additionally, the report warned that the volatility in oil prices has intensified, especially with the Iranian attack on Israel and the uncertain outcomes of potential Israeli responses.
The report also mentioned that continued attacks in the Red Sea and the ongoing Ukraine war may cause further supply shocks, hindering global recovery. Additionally, slower-than-anticipated declines in core inflation due to persistent labor market tightness or a stalling Chinese recovery could also negatively alter economic forecasts.
Economic Projections and Challenges Ahead
The IMF‘s 2024 forecast slightly raises growth by 0.1% from earlier predictions, though growth remains low historically. Euro area growth is expected to improve from 0.4% in 2023 to 0.8% in 2024 and 1.5% in 2025, influenced by the impact of the Ukraine war. U.S. growth is anticipated to rise to 2.7% in 2024 then decrease to 1.9% in 2025 due to fiscal tightening and softer labor markets.
The report emphasizes the resilience of the global economy amidst challenges such as tighter monetary policies, the ongoing effects of the pandemic, geopolitical tensions, and other structural issues impacting long-term growth.
While there are signs of economic resilience and marginal growth improvements, the IMF cautions against potential new crises and the need for vigilant monitoring of global economic trends and policy adjustments.
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
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With the growing global demand for digital infrastructure, Damac has been expanding its footprint in this important sector.
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Damac Group, a renowned conglomerate with a diverse investment portfolio of luxury real estate, hospitality, property management, and logistics, has announced its plan to invest up to $1 billion in the data centers sector over the next few years.
Recognizing the increasing global demand for digital infrastructure, Damac has been expanding its footprint in this crucial sector. A significant milestone in Damac’s diversification strategy was the launch of Edgnex Data Centers in 2021, which has enabled the group to capitalize on the growing need for robust digital infrastructure.
According to Damac, Edgnex is making significant strides in Saudi Arabia, with facilities under construction in Dammam and Riyadh that will deliver 55MW by 2025. Additionally, plans are underway for a data centre in Amman, Jordan, and another in Turkey in partnership with Vodafone.
In May, Damac had announced its entry into the Indonesian market with plans to build a data center in Jakarta. The 15MW facility, located along MT Haryono, is scheduled to complete its first construction phase in the fourth quarter of 2025.
“This substantial investment in the data center sector reflects our commitment to advancing digital infrastructure and supporting the technological transitions that are essential for future growth and innovation,” said Hussain Sajwani, the Founder and Chairman of Damac Group.
In addition to the technological transitions and diversification, particularly in the data centers sector, Damac Group is heavily focusing on its Artificial Intelligence (AI) investments.
The increased focus on AI and technological infrastructure, he stated, is expected to bolster the Group’s existing portfolio and pave the way for new strategic partnerships and collaborations.
By investing in AI and data centers, it aims to leverage advanced technologies to create value and drive sustainable growth, he added.
The Damac Group’s diversified family office has already invested in over 70 funds across various strategies, demonstrating its commitment to fostering innovation and growth across multiple industries.
With this new focus on AI, the Group aims to further enhance its role in advancing foundational AI models and infrastructure.
“As a forward-thinking organization, we recognize the transformative potential of AI in shaping the future,” remarked Sajwani.
“Our increased investment in AI reflects our commitment to supporting the development of groundbreaking technologies that can drive significant progress and create new opportunities across various sectors,” he stated.
According to him, Damac has made notable investments in leading AI companies including a $50 million in the AI startup, Anthropic – as one of the top investors who have bought into the company from the bankrupt cryptocurrency exchange, FTX.
Also it has made investments in xAI – an American AI startup founded by Elon Musk and in Mistral – a France-based AI company which is one of the best European large-language model open source.
“We are excited to be part of the AI revolution and to contribute to the growth of this dynamic industry,” said Sajwani.
“Our investments in companies like Mistral, Anthropic, and xAI underscore our dedication to fostering innovation and driving the next wave of technological advancements,” he added.
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
