The ongoing conflict between Hamas and Israel, compounded by the ongoing Russia-Ukraine war, doesn’t bode well for the global economy, say some experts. These conflicts could jeopardize the world’s major economies.

Over the past century, the global economy has seen increasing integration, resulting in interconnectedness, often referred to as globalization. Some economists see globalization as stalling, while others believe it is reversing, influenced by events like the U.S.-China tariff war, the covid-19 pandemic, and most recently, Russia’s invasion of Ukraine, Bloomberg reported.

However, since the global financial crisis of 2008, many countries have embraced protectionist policies to safeguard their domestic industries from foreign competition. This unraveling of economic ties is deglobalization.

As the Israel-Hamas conflict unfolds and geopolitical tensions persist, there are economists who say the implications could tip the balance more to deglobalization. For some economists, this isn’t new–Wells Fargo economists, for example, have recently taken a bearish stance as they say globalization has already ended.

And, they predict Israel’s declaration of war against Hamas could be yet another catalyst for deglobalization, CNN reported.

“With deglobalization, you get a global economic environment that’s less competitive, and when there’s less competition, that is ultimately inflationary, causing prices to rise,” Brendan McKenna, an international economist at Wells Fargo, told CNN.

According to McKenna, this means higher inflation.

“If we do continue to get this economic fracturing led by geopolitics, that’s ultimately going to be something that’s inflationary, which can lead to higher interest rates, not just from the Fed, but also from other major central banks around the world,” he noted. “And not only are you going to get pretty scary forces that would reduce global GDP growth and act as a restraint on global economic activity, but you can also get tighter monetary policy as a result, which could kind of compound those effects as well.”

Smoke rises following an Israeli airstrike in the Gaza Strip, as seen from southern Israel, Oct. 15, 2023. Israel has been striking targets throughout Gaza since a bloody, cross-border attack by Hamas militants killed over 1,300 and captured many Israelis on Oct. 7. (AP Photo/Ariel Schalit)