The expectation that the world economy will return to a healthy and stable growth path once the dust of war in the Middle East has settled is unrealistic to begin with. Obviously, the workload for the world economy to return to healthy growth will be high on both sides of the Atlantic.
First, financing of growth can be an issue with significant dependence on external resources. Second, domestic currencies tend to fall with reversal of capital flows. Third, bank-intermediation is also adversely affected as was observed during the recent crisis. Under such circumstances, countries with well functioning and liquid local bond markets cope better with shocks and the risks stemming from frozen credit markets.