ISRAEL AT WAR - DAY 145

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Israel-Gaza war could add to global economic woes, IMF head warns

Kristalina Georgieva says ongoing war is ‘darkening the horizon’ for an already weakened global economy as energy watchdog keeps an eye on feared oil supply disruptions

Managing Director of the International Monetary Fund Kristalina Georgieva attends the annual meetings of the IMF and World Bank Group in Marrakesh on Thursday, October 12, 2023. (Fadel Senna/AFP)
Managing Director of the International Monetary Fund Kristalina Georgieva attends the annual meetings of the IMF and World Bank Group in Marrakesh on Thursday, October 12, 2023. (Fadel Senna/AFP)

MARRAKESH, Morocco — The ongoing war between Israel and Hamas has darkened the horizon for the world economy, already experiencing weak growth, IMF chief Kristalina Georgieva said Thursday.

Speaking at the IMF-World Bank annual meetings in Marrakesh, Morocco, Georgieva said the International Monetary Fund was “very closely monitoring how the situation evolves” and how it is affecting oil markets.

Georgieva noted that the IMF’s World Economic Outlook, released earlier this week but drafted before the conflict broke out, already showed weak global growth.

“We are experiencing severe shocks that are now becoming the new normal for a world that is weakened by weak growth and economic fragmentation,” she said at a news conference.

She said it was “too early” to assess the impact of the conflict between Israel and Palestinian terror group Hamas.

But, Georgieva added, “very clearly, this is a new cloud on not the sunniest horizon for the world economy — new cloud, darkening this horizon.”

The IMF has kept its growth forecast at 3 percent for this year but lowered it to 2.9% for 2024, warning that the economy is “limping along, not sprinting.”

This weekend’s unprecedented attack by Hamas terrorists killed over 1,300 Israelis — most of them civilians slaughtered in their communities. The ongoing crisis has rattled oil markets due to fears that other nations might intervene and possibly disrupt shipments in the Middle East.

An oil tanker belonging to the Europe-Asia Pipeline Company docked in Eilat, Israel from May 28 to 30, 2023. (Courtesy, Zalul)

Global oil prices jumped at the start of the conflict but have since eased as there was no immediate disruption to supply flows.

IMF Chief Economist Pierre-Olivier Gourinchas said Tuesday that IMF research shows that a 10% increase in oil prices could weigh down on global growth by 0.15% and increase inflation by 0.4%.

The International Energy Agency said on Thursday the risk of oil supply disruptions due to the war is limited, but that it stands ready to intervene in markets if necessary.

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