• Fri. Mar 1st, 2024

Resilient Global Economy Faces Challenges from Oil Production Cuts, Political Conflicts and Energy Subsidies


Feb 12, 2024
IMF Chief: Global Economy Shows Resilience Amid Uncertainties

The global economy has shown surprising resilience despite several challenges, including short-term oil production cuts, the Israel-Gaza conflict, and tight monetary policies in the Middle East, according to International Monetary Fund (IMF) managing director Kristina Georgieva. She spoke at the World Governments Summit in Dubai on 11 February and highlighted how the decline in oil demand will become increasingly challenging for net energy importers in the medium term.

Georgieva noted that the Israel-Gaza conflict has had a significant impact on neighboring economies, with rising freight costs and a nearly 50% drop in Red Sea transit volumes affecting growth prospects. She also warned that any further widening of the conflict could worsen economic conditions for countries still recovering from previous shocks.

In addition to these challenges, Georgieva pointed out that historically high debt and borrowing needs, limited access to external financing, and regressive energy subsidies are already putting pressure on net energy importers. Eliminating these subsidies would not only discourage pollution but also help improve social spending and save $336 billion in the region, equivalent to the economies of Iraq and Libya combined.

Despite these challenges, Georgieva stated that growth is expected to surpass previous year’s growth in 2024 for many countries around the world. However, she cautioned that while this is good news, it’s essential to continue implementing reforms that promote sustainable growth and stability across regions. The IMF expects 2024 GDP growth for the Middle East and North Africa (MENA) region to reach 2.9%, down from 3.4% previously.

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