The impact on global markets was initially limited, as investors viewed the conflict as contained. However, the prospect of a regional spillover has added to a sense of unease.
El-Erian, who is chief economic advisor at Allianz, said that the longer the fighting continues, the greater the chance that it will escalate into a regional conflict with implications for global financial markets. El-Erian said that such contagion would compound the already pervasive issues facing the global economy, including stagnating growth, stubbornly high inflation and the broader fragmentation of markets.
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