In a speech at the World Governments Summit in Dubai on 11 February, Kristina Georgieva, managing director of the International Monetary Fund (IMF), discussed the resilience of the global economy despite several challenges. Georgieva highlighted that despite the impact of short-term oil production cuts, the Israel-Gaza conflict, and tight monetary policies in the Middle East, the global economy has been resilient and growth exceeded expectations in 2023.
The Israel-Gaza conflict and subsequent rise in freight costs have affected neighboring economies, according to Georgieva. She also noted that any further widening of the conflict could worsen the economic situation for countries still recovering from previous shocks. The decline in oil demand will become an increasingly challenging issue over the medium term for net energy importers, who are already limited by historically high debt and borrowing needs and limited access to external financing.
Georgieva also mentioned that while growth in 2024 is expected to surpass the previous year’s growth rate, the global medium-term growth prospects remain anemic. The IMF expects 2024 GDP growth for the Middle East and North Africa (MENA) region to reach 2.9%, down from 3.4% previously.
Finally, Georgieva announced that on February 12th, IMF will publish a paper recommending gradual energy subsidy reforms for the Middle East, which could save $336bn in the region, equivalent to economies of Iraq and Libya combined. Georgieva suggested eliminating regressive energy subsidies would discourage pollution and help improve social spending.
Overall, Georgieva’s speech highlighted that despite several challenges facing different regions globally