On Monday, the IMF and World Bank jointly cautioned that the ongoing Gaza war and associated attacks on shipping in the Red Sea pose significant threats to the global economy.
The conflict, persisting since October, has already impacted the economy of the Middle East and North Africa region, according to Kristalina Georgieva, the managing director of the International Monetary Fund.
Georgieva expressed concerns at the World Governments Summit in Dubai about the potential global repercussions if the Gaza conflict prolongs. She particularly highlighted the risk of spillover in the Suez Canal, where attacks on Red Sea shipping by Yemen’s Iran-backed Houthi rebels have disrupted maritime passage.
The Houthis claim to be targeting Israeli-linked shipping in solidarity with Palestinians in Gaza, causing some cargo carriers to take longer and more expensive routes to avoid attacks.
The UN Conference on Trade and Development reported a more than 40 percent decline in the volume of commercial traffic through the Suez Canal in the previous two months due to these disruptions.
Georgieva emphasized that if the conflict’s consequences escalate, especially regarding the direction of the fighting, it could become more problematic for the global economy.
Despite the uncertainties related to the Gaza war, Georgieva expressed confidence that the world economy is poised for a soft landing. However, she acknowledged the need to monitor the situation closely.
World Bank President Ajay Banga, also speaking at the summit, identified the challenges in Gaza, Ukraine, and the Red Sea as significant factors affecting the global economic outlook. With these variables added to the already low growth of the past 55 years, he stressed the importance of close monitoring.
