The International Monetary Fund (IMF) managing director, Kristina Georgieva, discussed the resilience of the global economy despite the impact of short-term oil production cuts, the Israel-Gaza conflict, and tight monetary policies in the Middle East. She was speaking at the World Governments Summit in Dubai on 11 February, where she addressed the audience and stated that surprisingly, the global economy has been resilient and growth exceeded expectations in 2023.
Georgieva added that while growth in 2024 is expected to surpass the previous year’s growth, the global medium-term growth prospects remain anaemic. The IMF expects 2024 GDP growth for the Middle East and North Africa (MENA) region to reach 2.9%, down from 3.4% previously.
The Israel-Gaza conflict and the subsequent rise in freight costs have impacted neighboring economies according to Georgieva. She also noted that any further widening of the conflict could worsen their economic situation for countries still recovering from previous shocks.
Georgieva highlighted that oil demand will become increasingly challenging over time for net energy importers who are already limited by historically high debt and borrowing needs as well as limited access to external financing.
The IMF is publishing a paper on February 12 recommending gradual energy subsidy reforms for the Middle East which could save $336bn in the region equivalent to combined economies of Iraq and Libya combined. Georgieva suggested eliminating regressive energy subsidies would discourage pollution and help improve social spending.