Red Sea Crisis Will Lead To Oil Price Hike In India: WEF Chief

New Delhi: Ongoing tensions in the Red Sea due to frequent drone attacks on merchant ships by Yemen’s Houthi rebels don’t augur well for global economy, World Economic Forum (WEF) president Borge Brende has said.

A negative impact on global supply chain will lead to a $10-$20 increase in oil prices for oil-importing countries like India, resulting in likely negative effects on its economy, Brende said in an exclusive interview to India Today TV/Business Today.

Brende opined that closure of the Suez Canal will hurt global supply chain and hoped that Houthi attacks will stop soon.

Highlighting trade growth fall from 3.4% to 0.8%, Brende hoped global trade will “pick up a bit” this year despite the Red Sea crisis.

“But it doesn’t take much to also have a negative impact on this if we close the Red Sea. The fact that even closing the Suez Canal for weeks will also have a very negative impact on the global supply chain. So, a lot is at stake. We also know that this has an impact on oil prices and for big oil-importing countries like, for example, India, where a $10-20 increase in oil prices will have very negative effects on the economy,” he said ahead of the 54th edition of the annual WEF which begins in Davos, Switzerland, on Monday.

“So, I hope that this will not escalate further and that shipping can reconvene as usual in the Red Sea in a few days,” Brende added.

Brende praised India, saying that the country was growing in digital economy twice as fast as the rest of the economy.

“India has been at the forefront due to the digital economy and export of services. This is a very sweet spot for India. But, of course, reforms should have to continue in India. Reforms related to education, funding and reforms to tackle unnecessary red tape should continue. I feel there is an understanding of all these things in New Delhi,” Brende said.

Expressing optimism about Indian economy, Brende said it was expected to grow at 8% this year.

“We think, in the coming decade, we can be speaking about a $10 trillion economy, at least in the coming two decades,” he said.