The International Monetary Fund (IMF) has raised alarms regarding the escalating conflicts in the Middle East and their potential economic repercussions. On October 4, 2024, Julie Kozack, spokesperson for the IMF, highlighted significant economic consequences for the region and beyond, noting that the GDP in the West Bank plummeted by 25% in the first half of the year due to ongoing tensions. Gaza is currently facing a humanitarian crisis, exacerbating the economic challenges in the area.
Lebanon's instability has worsened as a result of these conflicts, further straining the region's economic landscape. Additionally, Israel's GDP contracted by 20% in the last quarter of the previous year, although there was a partial recovery noted in the first half of this year. These developments underscore the fragility of the economies in the region amidst rising geopolitical tensions.
Kozack's remarks come ahead of the IMF's economic outlook report, which is set to be released during the upcoming IMF-World Bank Annual Meetings. She also praised the US Federal Reserve's efforts to combat inflation, forecasting core Personal Consumption Expenditures (PCE) inflation at 2.5% by the end of the year and 2% by mid-2025. Furthermore, she recommended that the Bank of Japan gradually raise interest rates to stabilize its economy.
These insights from the IMF reflect a growing concern about the interplay between regional conflicts and economic stability, highlighting the need for careful monitoring and strategic responses to mitigate the risks posed by these escalating tensions in the Middle East.