What if the Strait of Malacca is closed?
It is one of the funny things in financial markets that every year, we all suddenly become experts in something new.
The Strait of Malacca is a crucial maritime route connecting the Indian and Pacific Oceans. Its potential closure could have significant economic repercussions, as detailed in a recent paper. The study examines the impact of five scenarios: closure of the Panama Canal, Suez Canal, Strait of Malacca, opening of the Thai Canal, and Northwest Passage.
The paper estimates the GDP effects on major countries for each scenario, presenting five charts sorted from largest negative impact to largest positive impact. The paper concludes that a closure of the Strait of Malacca would have the most substantial negative impact on global GDP.
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