The ongoing Israel-Hamas conflict, now in its third week, has cast a shadow over the global economic outlook. In a panel hosted by CNBC’s Dan Murphy at the Future Investment Initiative Institute (FII) conference in Riyadh, Managing Director Kristalina Georgieva of the International Monetary Fund (IMF) discussed the deepening economic concerns stemming from the crisis.
Economic Jitters in a Turbulent World
At the FII conference, Kristalina Georgieva expressed her concerns about the Israel-Hamas conflict exacerbating an already turbulent global economic landscape. She described it as “more jitters in what has already been an anxious world” and highlighted that these additional uncertainties are akin to adding one more cloud to a horizon that was already overcast.
Terrible Economic Fallout
Georgieva’s assessment of the economic consequences of the war was grim. She used the term “terrible” to describe the economic prospects for the countries involved in the conflict. The economic impacts are not limited to the immediate epicenter of the war; they extend to neighboring nations, such as Egypt, Lebanon, and Jordan. The conflict is expected to disrupt trade and tourism, causing negative consequences for these economies.
The Israel-Hamas conflict is not confined to the warring parties. Its ripple effects are felt across the region. Trade channels and tourism, vital components of many Middle Eastern economies, are already being affected. Georgieva pointed out that Egypt, Lebanon, and Jordan are among the countries grappling with the ramifications of the ongoing hostilities.
Uncertainty Kills Tourism and Investment
Georgieva stressed that uncertainty is detrimental to tourism. Tourists are wary of visiting areas with ongoing conflicts or high levels of political instability. This can lead to a significant drop in tourism revenues, impacting countries that rely heavily on this sector for income. Furthermore, investors tend to be cautious about allocating capital to regions in turmoil, which can hinder economic growth and development.
Implications for the Broader Global Economy
While Georgieva focused on the regional effects of the conflict, she did not specifically address the global economic implications. However, the ongoing crisis can indirectly influence the world economy. Disruptions in regional trade and the increase in geopolitical tensions can impact global markets, causing fluctuations in oil prices and financial markets.
IMF’s Call for Resolution
Kristalina Georgieva emphasized that the IMF’s first priority is addressing the tragic loss of life caused by the offensive. She urged for a swift resolution to the conflict, highlighting that the sooner it is resolved, the better it will be for both the affected economies and the broader global economic stability.
The Israel-Hamas conflict has introduced a new layer of economic uncertainty in an already turbulent world. The economic fallout, especially in the affected region, is expected to be severe, with repercussions on trade, tourism, and investment. As the conflict continues, it is essential for regional and global leaders to work towards a swift resolution to mitigate the economic and humanitarian impacts of this ongoing crisis.