Economist Walid Gaballah warned during a phone interview with Extra News that disruptions to the global economy and trade are driving up shipping, insurance and transportation costs, adding to the burden on consumers, while any slowdown or recession could have a greater impact on the services and non-essential goods sectors.
Balanced commodity prices do not mean stability
Gaballah said the Food and Agriculture Organization of the United Nations, known as FAO, reporting a balance in global commodity prices as grain and sugar prices rise while meat and dairy prices fall, does not necessarily mean prices are stable. Analyzing each commodity separately reveals different challenges, he said.
He added that commodity price movements do not tell the full story amid additional costs linked to shipping, insurance and transportation, noting that it is difficult to predict the future of prices and trade as uncertainty continues to cloud the global economy.
Potential pressure on non-essential goods
Gaballah said any economic slowdown or recession would not affect essential goods to the same extent, but could put pressure on services and non-essential goods, including mobile phones, cars and luxury goods, as consumers allocate a larger share of their incomes to basic needs.
Local solutions to trade disruptions
He said heavy reliance on global trade in recent years has saddled most goods with additional transportation and insurance costs, arguing that seeking local solutions in agriculture and industry has become more economically viable after specialization and import mechanisms based on comparative advantage faced major challenges.
Gaballah noted that US tariffs and trade policies are hurting American consumers as food and gasoline prices rise, stressing that economic interdependence and globalization make it difficult for any country to avoid the fallout from disruptions to the global economy.
