In a speech at the World Governments Summit in Dubai on 11 February, IMF managing director Kristina Georgieva discussed the resilience of the global economy despite various challenges. She noted that despite 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.
Georgieva explained that while the Israel-Gaza conflict and subsequent rise in freight costs have impacted neighboring economies, any further widening of the conflict could worsen the economic situation for countries still recovering from previous shocks.
The decline in oil demand is also becoming 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 added that while growth in 2024 is expected to surpass the previous year’s growth, the global medium-term growth prospects remain anaemic. The IMF expects 2024 GDP growth for the Middle East and North Africa (MENA) region to reach 2.9%, down from 3.4% previously.
In conclusion, Georgieva emphasized that eliminating regressive energy subsidies would discourage pollution and help improve social spending. The IMF is publishing a paper on February 12 recommending gradual energy subsidy reforms for the Middle East which could save $336bn in the region equivalent to economies of Iraq and Libya combined.