TUNIS: The escalation of violence between Israel and Hamas has raised concerns about its potential impact on the global economy. As the international community watches this tragic spectacle, the question arises: could this be the pivotal moment when the “global South” asserts itself as a formidable geoeconomic force?
The United Nations General Assembly vote on October 26 showed a divided international community. The United States found itself in a small minority, aligning with Israel against the motion. The EU, often seen as a staunch ally of the United States, has displayed a scattered stance. Meanwhile, most developing countries favored a ceasefire, except India, which came out in favor of Israel with one abstention.
History suggests that even when the United States faces criticism for its foreign policy decisions, it does not necessarily hamper its ability to engage in global trade or negotiations. The aftermath of George W. Bush’s Iraq War in 2003 saw a decline in global opinion toward the United States, without isolating the country economically.
Additionally, the United States has demonstrated resilience by initiating and participating in major trade deals despite geopolitical controversies. The 2008 Trans-Pacific Partnership, which included countries economically oriented toward China, and ongoing negotiations in the Indo-Pacific Economic Framework this week underscore America’s commitment to its trade commitments.
The global economy is still recovering from the economic shock caused by the pandemic, and the true costs are only now becoming evident.
Ryan O’GradyCEO of KI Africa
However, experts warn that the current conflict could disrupt the global economy and, in the worst case, push it into recession. If the Israeli military were to engage with militias in Lebanon and Syria that support Hamas, the conflict could escalate into a regional war.
Such an escalation could lead to a surge in oil prices, with estimates suggesting they could rise as high as $150 per barrel, which would have a significant impact on global growth. The interdependence of the global economy means that disruptions in the Middle East can send shockwaves around the world, affecting inflation, economic stability and even geopolitical relations.
Amid the ongoing conflict in Gaza, the international community faces an uncertain economic future. As the situation evolves, the world eagerly awaits a solution that could potentially bring stability and prosperity to the region and beyond.
The recent annual meetings of the International Monetary Fund and the World Bank in Marrakech took place against the grim backdrop of the escalating conflict between Israel and Hamas in Gaza. Initially convened to address critical development financing challenges, the continuing war in the Middle East has cast a pervasive shadow of uncertainty over the global economic landscape.
IMF Managing Director Kristalina Georgieva warned that the war was “darkening the horizon” of an already weakened global economy. Concerns about possible disruptions to oil supplies and their impact on the global economy have been raised, especially as the International Energy Agency closely monitors the situation.
Against the backdrop of the IMF’s cautious growth projections, which maintain a forecast of 3% for the current year but signal a decline to 2.9% in 2024, indicating the fragile state of the global economy, global prices oil have experienced significant turbulence.
Initially responding to the conflict with a sharp rise, these prices reflected the increased uncertainties introduced by geopolitical tensions. However, subsequent stabilization brought relief as limited oil supply disruptions eased concerns.
Adding a layer of nuance to the economic landscape, Said Skounti, a Morocco-based researcher at the IMAL Climate and Development Initiative, shared his insights on the implications of the IMF meetings. Despite initial optimism and aspirations for transformative changes in international finance throughout the year, Skounti’s observations highlight that the meetings concluded without conclusively addressing key challenges.
This Skounti perspective provides a critical lens through which to understand the gaps between expectations and outcomes in the realm of global financial deliberations.
We should stop allocating funds to projects that have a marginal impact on people and the environment.
Abderrahim KsiriMoroccan political expert
“IMF member states have agreed to increase their contributions and grant Africa a third seat on the board, a move seen as a step towards better governance. However, the distribution of quotas determining voting power saw no change, highlighting the persistent challenges in achieving fair representation,” Skounti told Arab News. Furthermore, apart from the agreement reached on Zambia’s debt restructuring, “calls for larger-scale debt cancellation, advocated by NGOs and African leaders, have received limited attention,” he said. he added.
In regions like the Middle East and Africa, where numerous investment opportunities arise across various sectors, it becomes imperative to build resilient partnerships for businesses to thrive amid global uncertainties. However, in the context of these challenges, the objective of the IMF and World Bank meetings in Marrakech was to address the critical challenges of financing development.
The Gaza conflict casts a shadow over these economic discussions. As the world witnesses continued violence in the Middle East, the global economy remains tense, shrouded in uncertainty about the future. The business implications, the looming potential for wider regional conflict and the overall economic consequences are all hanging in the balance.
“The global economy is still recovering from the economic shock caused by the pandemic, and the true costs are only now becoming evident. Simultaneously, multiple wars are taking place, impacting crucial aspects such as the cost of food and fuel,” Ryan O’Grady, CEO of KI Africa, an investment firm, remarked to Arab News. By advocating for a focus on supporting the stability of supply chains, ensuring long-term and affordable loans, and promoting collaboration on regional integration, O’Grady highlights the need to address these challenges to foster a resilient global economic environment.
Faced with these complexities, the IMF and the World Bank are actively seeking to strengthen collaboration with the private sector. They provide investment guarantees and mechanisms to mitigate risks associated with investments in African markets. This proactive approach is expected to reduce the cost of capital, making projects more competitive and profitable in pursuit of economic stability.
Fears have also grown that oil prices could influence the willingness of richer countries to help climate-ravaged nations, potentially slowing the transition away from hydrocarbon production. At the same time, the current crisis in Gaza, marked by its devastating impacts on water infrastructure, mass displacement and the increased vulnerability of Palestinians to climate change, offers an opportunity to amplify voices highlighting the imperative to safeguard communities vulnerable across the world, particularly in the context of environmental consequences.
“Our goal should stop allocating funds to projects with marginal impact on both the population and the environment,” Abderrahim Ksiri, a Moroccan political expert, told Arab News.
“Comprehensive consideration of climate-related factors in financing development projects in various industries is essential to address the challenges posed by climate change and ensure a sustainable future,” he added.