As the managing director of the International Monetary Fund (IMF), Kristina Georgieva discussed the resilience of the global economy despite several challenges, including short-term oil production cuts, the Israel-Gaza conflict, and tight monetary policies in the Middle East. She spoke at the World Governments Summit in Dubai on February 11th and stated that surprisingly, despite these challenges, growth exceeded expectations in 2023.
Georgieva noted that while growth in 2024 is expected to surpass the previous year’s growth, 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. However, Georgieva also pointed out that any further widening of the Israel-Gaza conflict could worsen economic conditions 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 have limited access to external financing. Georgieva suggested that eliminating regressive energy subsidies would discourage pollution and help improve social spending, which could save $336bn in the region, equivalent to Iraq and Libya combined.