IMF Warns of Middle East Conflict’s Global Economic Impact
Commodity prices stable, but risks of escalation remain high

The International Monetary Fund (IMF) expressed concern on Thursday over the potential economic consequences of escalating conflict in the Middle East, noting that while commodity prices remain lower than last year’s highs, the situation could still have significant impacts on both the region and the global economy.
IMF spokesperson Julie Kozack, speaking during a routine news briefing, said the Washington-based organization is closely monitoring developments in southern Lebanon with “grave concern” and extended condolences for the loss of life.
“The risk of further escalation in the conflict increases uncertainty and could lead to serious economic consequences for the region and the global economy,” Kozack stated.
While it is too early to predict specific global economic effects, Kozack highlighted the severe toll the conflict has already taken on regional economies, particularly in Gaza. She described the region’s conditions as dire, with a humanitarian crisis and inadequate aid deliveries exacerbating the situation.
According to IMF estimates, Gaza’s GDP shrank by 86% in the first half of 2024, while the West Bank experienced a 25% decline in GDP during the same period, with further deterioration likely.
Israel’s economy, too, has been hit hard, with its GDP dropping by around 20% in the last quarter of 2023 following the start of the conflict, and only a partial recovery observed in the first half of 2024.
The IMF plans to release updated economic forecasts for both individual countries and the global economy later in October, coinciding with the organization’s fall meetings with the World Bank in Washington.
Kozack also pointed out the worsening situation in Lebanon, where the conflict has compounded the country’s already precarious economic and social conditions. Referring to Israel’s air strikes on Hezbollah in Lebanon, she said the fighting has exacted a severe human cost and caused significant damage to infrastructure.
She explained that the primary global economic effects of the conflict have been seen in rising commodity prices, including oil and grains, as well as higher shipping costs. Some vessels have rerouted to avoid potential missile attacks by Houthi militants in the Red Sea. Despite these concerns, commodity prices are currently lower than last year’s peaks.
Kozack emphasized that the IMF continues to monitor the situation closely, noting the “high uncertainty” surrounding the conflict’s potential escalation.
She also touched on Lebanon’s stalled loan agreement with the IMF, saying that while an agreement was reached in 2022, there has been insufficient progress on necessary reforms. The IMF remains open to engaging with Lebanon on a possible financing program when conditions allow, but decisive policy actions will be required. In the meantime, the IMF is providing Lebanon with capacity-building assistance where possible.
Follow us on our social media platforms here: Twitter WHATSAPP CHANNEL FACEBOOK PAGE