In a statement delivered at the annual meetings of the International Monetary Fund (IMF) and World Bank in Morocco on Wednesday, US Treasury Secretary Janet Yellen expressed confidence that the ongoing conflict between Israel and Hamas is not poised to exert a substantial influence on the worldwide economy. Yellen affirmed, “While we are monitoring potential economic impacts from the crisis, I’m not really thinking of that as a major driver of the global economic outlook. Thus far I don’t think we’ve seen anything suggesting it will be very significant.”
Global financial markets appear to be echoing this sentiment, with Wall Street witnessing gains on Tuesday, bolstered in part by a decline in oil prices. Prior to this, concerns over the conflict had propelled global oil prices upwards, as apprehensions mounted regarding the potential for broader instability within the oil-producing Middle East.
Secretary Yellen, however, asserted that the United States has made no concessions in relaxing sanctions on oil exports from Iran. Additionally, energy giant Chevron (CVX) confirmed the closure of a natural gas field situated off the coast of Israel. This development may result in a reduction of Israeli gas exports to neighboring countries such as Egypt and Jordan, potentially exerting pressure on an already strained global gas market and leading to a surge in energy prices.
IMF’s Chief Economist, Pierre-Olivier Gourinchas, emphasized this week that commodity prices present a “serious risk” to the inflation outlook, underscoring their potential to become more volatile in the face of climate and geopolitical disruptions. The IMF maintains a cautiously optimistic outlook, contending that central banks are well-positioned to manage inflation without inadvertently plunging the global economy into recession. Nevertheless, the organization has revised down its growth projection for global output in 2024 by 0.1 percentage point to 2.9%.
At present, the IMF refrains from offering a definitive assessment of the potential economic repercussions of the ongoing conflict in the region and its wider impact. It notes that economic growth continues to exhibit fragility and inconsistency, forecasting global economic expansion at 3% for the current year—a figure below the 3.8% average recorded between 2000 and 2019.
In summation, the consensus among economic experts and officials is that the Israel and Hamas conflict is unlikely to exert a substantial, enduring influence on the global economy in the immediate future. However, they advocate for sustained vigilance and ongoing monitoring of potential risks that may emerge from this ongoing geopolitical struggle.
Source: CNN
