The IMF and the World Bank cautioned on Monday that the war in Gaza and related assaults on shipping in the Red Sea were endangering the world economy.
International Monetary Fund managing director Kristalina Georgieva said at the World Governments Summit in Dubai that the Gaza war had already damaged the economy in the Middle East and North Africa.
She warned that the impact worldwide would be greater as the war dragged on.
“I fear most a longevity of the conflict because, if it goes on and on, the risk of spillover goes up,” she said.
“Right now we see a risk of spillover in the Suez Canal,” she stated, as international shipping has been affected due to attacks by Houthi rebels in the Red Sea.
The Houthis are attacking shipping they believe is connected to Israel in solidarity with Palestinians besieged in Gaza, leading shipping to alternate their routes across Africa and increasing the cost of goods.
The UN Conference on Trade and Development said in January that commercial traffic going through the Suez Canal had shrunk by more than 40 percent.
Despite the difficulties, Georgieva said the IMF was “very confident that the world economy is now poised for this soft landing we have been dreaming of.”
I expect to see by mid-year interest rates going in the direction inflation has been going for the last year now,” she said.
World Bank President Ajay Banga said what’s going on Gaza, but also the challenges of Ukraine… and the Red Sea” were the main challenges to the global economic outlook.
“When you add these variables to what is already turning out to be probably the lowest growth of the last 55 years…. that’s something we have to keep a close eye on,” he said.
