Georgieva: Economic activity in Gaza has declined by 80% (Reuters)
The International Monetary Fund revealed on Sunday that the economies of the Middle East will slow down in 2024 due to the reduction in oil production and the war on Gaza, even in light of the solid global economic outlook.
“While uncertainty remains high, we are a bit more confident about the economic outlook because the global economy is surprisingly resilient,” International Monetary Fund Director Kristalina Georgieva told the Arab Finance Forum in Dubai, but she warned of the possibility of a broader impact. On regional economies as a result of the continuing war on Gaza.
Georgieva added that the economies of the countries neighboring Israel and the Palestinian territories have witnessed the impact of the conflict on tourism revenues, and she added that the Fund is closely monitoring the financial impacts.
She stated that the impact of the conflict in the Middle East is manifested by the rise in shipping costs and the decrease in traffic through the Red Sea
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indicating that the expansion of this conflict may exacerbate the economic damage at the global level.
The Houthis have been targeting commercial ships in the Red Sea since mid-November and say that their attacks come in solidarity with the Palestinians amid Israel's war on Gaza.
Several international shipping companies diverted their ship traffic to the Cape of Good Hope route, which is longer than the Egyptian Suez Canal route.
In the latest update on the status of the regional economy published by the Fund last month, the Fund revised its expectations for GDP growth for the Middle East and North Africa region and reduced it to 2.9% this year, that is, less than its expectations last October, and one of the reasons for this is the reductions in oil production in the long term. Al-Qusayr and the conflict in Gaza.
Georgieva also pointed out that the war had destroyed the economy of the Gaza Strip and the occupied West Bank, considering that only “permanent peace” would improve prospects.
According to Georgieva, economic activity in the Strip declined by 80% between last October and December compared to the previous year, and she added that in the West Bank the decline reached 22%.
Support energy and tsunami artificial intelligence
In another matter, Georgieva said that the International Monetary Fund will publish a document tomorrow, Monday, showing that the gradual cancellation of energy subsidies could save $336 billion in the Middle East region, which is equivalent to the economies of Iraq and Libya combined.
She added that in addition to saving this amount, phasing out energy subsidies “reduces pollution and helps improve social spending,” according to a copy of the letter posted on the International Monetary Fund’s website.
The IMF says that fossil fuel support in the Middle East and North Africa region reached 19% of GDP in 2022.
It recommends phasing out energy subsidies within the region's economies, including oil-exporting countries, proposing targeted subsidies as an alternative.
Regarding advanced technology, Georgieva said that 40% of jobs globally are vulnerable to being affected by artificial intelligence, and countries that lack investment in infrastructure and a skilled workforce are lagging behind.
Source: Al Jazeera + agencies