Roger W. Ferguson Jr.
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Iran’s closure of the Strait of Hormuz after the February U.S. and Israeli attack has sparked a global economic supply shock. The resulting damage could exceed the disruptions caused by Russia’s invasion of Ukraine in 2022. Despite a two-week ceasefire, traffic through the strait has hardly resumed to the level that President Donald Trump had promised, and countries around the world have started to feel the effects.
Asia has been hit particularly hard: more than 80 percent of the oil that typically transits the strait goes to the region, which means several countries have had to implement fuel-saving measures because of the conflict. In Bangladesh, garment factories are sitting idle; Pakistan has begun closing schools; and countries like the Philippines and Sri Lanka have shortened the workweek. Even wealthier economies such as Australia and South Korea have started to encourage conservation efforts.
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