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Israel-Hamas war a ‘new cloud’ over world economy: IMF

IMF Chief Kristalina Georgieva highlighted the Israel-Hamas conflict’s impact on an already weakened world economy, with severe shocks becoming the new normal amid global economic fragility and weak growth. Oil markets are closely monitored.

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MARRAKESH, MOROCCO — The war between Israel and Hamas has darkened the horizon for a world economy that was already experiencing weak growth, IMF chief Kristalina Georgieva said Thursday.

Speaking at the IMF-World Bank annual meetings in Marrakesh, Morocco, Georgieva said the International Monetary Fund was “very closely monitoring how the situation evolves” and how it is affecting oil markets.

Georgieva noted that the IMF’s World Economic Outlook, which was released earlier this week but drafted before the conflict broke out, already showed weak global growth.

“We are experiencing severe shocks that are now becoming the new normal for a world that is weakened by weak growth and economic fragmentation,” she said at a news conference.

She said it was “too early” to assess the impact of the conflict between Israel and Palestinian militant group Hamas.

But, Georgieva added, “very clearly, this is a new cloud on not the sunniest horizon for the world economy — new cloud, darkening this horizon.”

The IMF has kept its growth forecast a 3.0 percent for this year but lowered it to 2.9 percent for 2024, warning that the economy is “limping along, not sprinting.”

The weekend attack by Palestinian militant group Hamas on Israel from Gaza has left thousands dead and rattled oil markets amid fears that other nations might intervene and possibly disrupt shipments in the Middle East.

Global oil prices jumped at the start of the conflict but have since eased as there was no immediate disruption to supply flows.

IMF chief economist Pierre-Olivier Gourinchas said Tuesday that IMF research shows that a 10 percent increase in oil prices could weigh down on global growth by 0.15 percentage points and increase inflation by 0.4 percentage points.

The International Energy Agency said on Thursday the risk of oil supply disruptions due to the war is limited but that it stands ready to intervene in markets if necessary.

— AFP

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