Amidst uncertainties and geopolitical conflicts, the global economy has been surprisingly resilient. With growth exceeding expectations in 2023 and inflation expected to fall, the global economy is poised for a "soft landing" in 2024. However, victory cannot be declared prematurely, Kristalina Georgieva, the IMF's managing director, said at the opening remarks of the Fiscal Forum at the World Government Summit in Dubai.
The IMF expects the GDP growth in the MENA region to reach 2.9% this year, which is higher than last year, but still below its October projections. This is mainly due to short-term cuts in oil production, the Gaza-Israel conflict, and tight monetary policies.
Among exporters, slow growth outside the hydrocarbon sector is another factor. And declining oil demand will become an increasing headwind over the medium term. Net energy importers, meanwhile, are held back by historically high debt and borrowing needs, and limited access to external financing.
Georgieva said that economically, the impact of the Israel-Gaza conflict has been devastating for Gaza, where activity dropped 80% from October through December compared with a year earlier.
"The Palestinian economy’s dire outlook is worsening as the conflict persists—only a durable peace and political solution will fundamentally change it. The IMF will continue to provide policy advice and technical assistance to the Palestinian Authority and Palestinian Monetary Authority," she said at the WGS.
The impact of the conflict is mostly felt through rising freight costs and reduced Red Sea transit volumes—down by nearly 50% this year in our PortWatch data, Georgieva said.
Further widening of the conflict would aggravate the economic harm and compound the challenges of economies that are still recovering from previous shocks, she noted.
"But the Arab world can plant the seed of a better and more stable future in these challenging conditions. It can meet the reconstruction needs to come, strengthen resilience, and create the opportunities growing populations demand," the IMF's managing director said.
(Writing by Seban Scaria firstname.lastname@example.org; editing by Daniel Luiz)