The International Monetary Fund (IMF) and the World Bank warned on Monday that the war in Gaza and the associated regional escalation, which affects shipping movement in the Red Sea leading to the Suez Canal, pose a threat to the global economy.
Kristalina Georgieva, the Managing Director of the IMF, explained that the ongoing war between Israel and Hamas since October 7th has already harmed the economy of the Middle East and North Africa region, expressing concern that its indirect effects could impact the global economy if the conflict persists.
During the World Government Summit, an annual gathering of world leaders and business figures in Dubai, Georgieva said, “I am more afraid than ever before that the conflict might prolong, because if it continues, the risk of it expanding will increase.”
She added, “We are now witnessing in the Suez Canal the risk of its expansion,” referring to the attacks by Houthi rebels in Yemen on commercial ships in the Red Sea and the Arabian Sea, affecting navigation in the strategic area through which 12% of global trade passes.
Since November 19th, the Houthis, supported by Iran, have been attacking commercial ships in the Red Sea and the Arabian Sea suspected of being linked to Israel or headed to its ports, stating that this supports Gaza, which has been witnessing a war between Hamas and Israel since October 7th.
In an attempt to deter them, the American and British forces have launched three waves of strikes on their positions in Yemen since January 12th. The American military alone occasionally strikes at missiles it claims are prepared for launch.
Following the Western strikes, the Houthis began targeting American and British ships in the area, considering the interests of both countries as “legitimate targets.”
At the end of last month, the United Nations Conference on Trade and Development (UNCTAD) announced that the volume of trade through the Suez Canal decreased by 42% in January and December.
Georgieva warned that if there are “other consequences in terms of where the fighting is, it could be more problematic for the whole world.”
The war in Gaza erupted following an unprecedented attack by Hamas on southern Israel, resulting in over 1160 deaths, according to a tally by the French news agency based on official Israeli figures.
Israel responded with a concentrated bombing campaign followed by a widespread ground assault in the sector, resulting in at least 28340 deaths, the majority of whom were women and children, according to a Gaza Health Ministry tally.
Ajay Banga, the President of the World Bank, also speaking during the summit, said, “What is happening in Gaza, in addition to the challenges in Ukraine… and the Red Sea,” are among the biggest challenges facing the outlook of the global economy.
He emphasized, “When these variables are added to what is already appearing to be perhaps the lowest growth rate in the past 35 to 40 years… this is something we need to closely monitor.”
