Some nations with the world’s smallest gross domestic products could help decide the fates of a number of worldwide markets in the next several months. This despite what appears to be a mending global economy.
Many market experts believe that rising U.S. stocks would surge even more if the price of oil was not so high. Iran is at the center of the concern about energy prices. It could try to cut the flow of crude though the Strait of Hormuz. Its oil exports are already way down because of sanctions over its possible nuclear weapons programs.
Another weapons program threatens markets, most immediately in Japan and South Korea. North Korea may be set to experiment with long-range missiles that weapons experts believe could reach as far as the United States. North Korean also may be prepping nuclear bombs.
Iran is the world’s 26th-largest nation based on GDP. The size of North Korea’s economy is unknown because of the shroud the country keeps over vital information. North Korea’s GDP probably is not in the top 50 based on the size of imports and exports. It does not matter much. North Korea and Iran show how much economically unimportant nations can control global markets and, therefore, hundreds of billions of dollars in equity, bond and commodities prices.
North Korea and Iran are not the only flash points among small nations as measured by GDP. Nigeria, one of the world’s largest exporters of oil, is the 46th-largest economy in the world. The political climate is unusually unsettled there, and crude pipelines in the country has been attacked at several locations. Venezuela, smaller than Greece in GDP, has a long-time leader who may die soon, and a powerful opposition party that may try to take control. The nation’s defense minister said he will not support election results that push current president Hugo Chavez out of office.
The world grows ever smaller because of global information, the Internet and the falling ability of totalitarian regimes to shield their citizens from outside news. The shrinking world also threatens global economic damage because small countries have ever more outsized effects on huge markets.
Douglas A. McIntyre