IMF Warns of Significant Economic Risks from Escalating Middle East Conflict

Washington, D.C. – The International Monetary Fund (IMF) has expressed grave concerns over the potential economic fallout from the escalating conflict in the Middle East, particularly in southern Lebanon. Speaking at a news briefing on Thursday, IMF spokesperson Julie Kozack highlighted that further escalation could have severe economic consequences for the region and the global economy, despite commodity prices still being below last year’s peaks.

Kozack noted that the IMF is closely monitoring the conflict, particularly in Gaza, where socioeconomic conditions have drastically worsened. Gaza’s GDP has plummeted by 86% in the first half of 2024, with the West Bank also experiencing a 25% GDP decline. Israel, too, saw its GDP contract by 20% in late 2023, though partial recovery occurred earlier this year.

The conflict’s primary global economic risks stem from rising oil and grain prices, as well as increased shipping costs, particularly in the Red Sea, where vessels face threats from Yemeni Houthi militants.

While the IMF plans to update global economic projections later in October, Kozack emphasized the high uncertainty surrounding the conflict’s future impacts. She also noted that Lebanon’s fragile economic state continues to deteriorate, exacerbated by recent strikes on Hezbollah, though progress on an IMF loan program for Lebanon remains stalled due to insufficient reforms.