The war between Israel and the Palestinian Hamas in the Gaza Strip, which has been going on for almost three weeks, is already putting a strain on the economies of neighboring countries, the head of the International Monetary Fund (IMF) said on Wednesday.
“Look at the neighboring countries: Egypt, Lebanon, Jordan, where the impact is already visible,” Kristalina Georgieva said at an investor forum in Riyadh.
The Israeli army has been carrying out attacks in the Gaza Strip since October 7 in retaliation for bloody attacks by Hamas commandos on Israeli territory, the deadliest since Israel’s founding in 1948.
According to Israel, more than 1,400 people, mostly civilians, were killed in these attacks and about 220 Israeli, foreign or binational hostages were identified.
According to Hamas, the Islamist movement that has controlled this Palestinian territory since 2007, more than 5,791 people have been killed in Gaza since the war began, including 2,360 children.
Ms. Georgieva’s statement comes a day after senior finance officials warned at the opening of the Riyadh Forum on Tuesday about a possible blow this war could inflict on the broader global economy.
“What we are seeing is more nervousness in an already anxious world,” the IMF chief said. “There are countries that depend on tourism and uncertainty is hurting tourist flows,” she added.
She described the specific risks for the region, emphasizing that “investors will be reluctant to go to these countries, that insurance costs – if you want to transport goods – will increase and that there is a risk of an increase in the number of refugees.” in countries, which already accommodate many of them.
The Future Investment Initiative (FFI) conference, titled “Davos of the Desert,” is generally an opportunity for Saudi Arabia to highlight economic reforms, the success of which depends on regional stability, according to Saudi officials.
Saudi Arabia can withstand shocks
While leading speakers addressed the risks that the current regional turmoil poses to the economy, others highlighted the strength of the Saudi economy.
Thanks to its rich sovereign wealth fund, the Saudi Arabian Public Investment Fund, the world’s largest oil exporter is able to weather shocks and finance reforms.
The country has launched a sweeping reform program called Vision 2030, inspired by the kingdom’s crown prince and de facto ruler Mohammed bin Salman, aimed at reducing the economy’s dependence on oil.
The program aims to promote the transition to a more diversified economy around major projects such as the futuristic $500 billion megacity NEOM.
“Everything will move forward in Saudi Arabia itself and companies from Western countries, India and China will not give up on the Saudi market,” said Naser al-Tamimi, a Middle East specialist at the Italian Institute for International Political Studies.
“It is the largest economy and the largest construction market in the Middle East,” he emphasized.
According to organizers, more than 6,000 people are attending the Riyadh forum, including financiers, business leaders and the presidents of South Korea, Kenya and Rwanda.