Arab News Japan

TOKYO: Business concerns over an escalation of the Israel-Hamas war have declined markedly, according to a survey conducted by economic forecasting group Oxford Economics. 

In its latest survey, conducted from December 4 to 13, around a quarter of the businesses surveyed viewed the possibility of an escalated conflict in the Middle East over the next two years as a very significant threat to the global economy, but that was down by more than a half from the October survey.

The Global Risk Survey was conducted after the end of the temporary ceasefire in the conflict. Despite the resumption of hostilities, responses pointed to a shift in perceptions over the risk of an escalation.

During the latter half of October, almost 60 percent of businesses described developments in the Middle East as a very significant risk to the global economy looking ahead to the next two years. In the latest survey, only 27 percent of businesses view the Middle East as a very significant near-term risk.

In line with easing concerns over the risk of Middle East escalation, fewer businesses now see risks to global growth as weighted to the downside: 38 percent, down from 50 percent in October. 

While business concerns over an escalation of the Israel-Hamas war have eased since October, other geopolitical concerns are still regarded as significant. Roughly a quarter of respondents view China-Taiwan tensions as a major threat to the global economy over the next two years, broadly in line with the perceived threat from Middle East developments.

Overall, businesses viewed more than a 1-in-4 chance of a geopolitical risk scenario materializing. The survey found that the likelihood of higher-for-longer interest rates is perceived as greater than either a Middle East escalation or increased China-Taiwan tensions.