The managing director of the International Monetary Fund (IMF), Kristina Georgieva, spoke at the World Governments Summit in Dubai on 11 February, expressing her concerns about the impact of conflicts and policies on the global economy. Despite challenges such as the Israel-Gaza conflict, short-term oil production cuts, and tight monetary policies, Georgieva stated that the global economy remained resilient and exceeded expectations in 2023.
Georgieva highlighted that the Israel-Gaza conflict had led to rising freight costs and a nearly 50% drop in Red Sea transit volumes, which impacted neighbouring economies. She also expressed concern that any further escalation of the conflict could worsen economic harm to countries still recovering from past shocks.
Regarding expected growth in 2024, Georgieva noted that global medium-term growth prospects remain low, at around 3% compared to the historical average of about 3.8%. The IMF expects 2024 GDP growth for the Middle East and North Africa (MENA) region to reach 2.9%, down from 3.4% previously.
For the Middle East, Georgieva is promoting gradual energy subsidy reforms, which she suggests could save $336bn in the region, equivalent to the economies of Iraq and Libya combined. Eliminating these subsidies is also encouraged as they discourage pollution and can help improve social spending.