The ongoing conflict between Israel and the Palestinian militant group Hamas is causing further uncertainty in the already fragile global economy, according to statements made by International Monetary Fund (IMF) chief, Kristalina Georgieva, this Thursday. The comments were made during the IMF-World Bank annual meetings in Marrakesh, Morocco.
The IMF chief referred to the conflict as a "new cloud darkening" an already struggling world economy. The confrontation has led to thousands of casualties and has stirred turbulence in global oil markets since its inception last weekend. This has raised fears that other nations might intervene, potentially causing further disruption.
The IMF-World Economic Outlook had previously projected a growth rate of 3.0% for 2023 and 2.9% for 2024, reflecting a world economy weakened by economic fragmentation. The conflict initially resulted in a surge in oil prices, which have stabilized due to no immediate disruptions to the oil supply.
However, Pierre-Olivier Gourinchas, the IMF chief economist, warns that a 10% rise in oil prices could reduce global growth by 0.15 percentage points and inflate inflation by 0.4 percentage points.
Despite the concerns raised by the IMF, the International Energy Agency (IEA) asserts that the risk of oil supply disruptions due to the war is minimal but emphasizes that it is prepared to act if necessary.
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