May 29, 2024
World Economy

Economic fallout of Gaza war and Red Sea shipping risks

Letters to the Editor

FE Team
| Published: March 07, 2024 20:57:45

The International Monetary Fund (IMF) and the World Bank have jointly issued a warning about the potential impact of the Gaza war and attacks on commercial ships on the Red Sea on the global economy. During the World Governments Summit, an annual gathering of business and political leaders, IMF Managing Director Kristalina Georgieva expressed her apprehension about the ongoing conflict in the Middle East and North Africa region, which she believes could pose a significant threat to the world economy. She further expressed her concern about the prolongation of the conflict and emphasized the risk of spillover, which could have far-reaching implications. Yemen’s Iran-backed Houthi rebels have been targeting ships on the Red Sea, leading to a massive decrease of over 40 per cent in commercial traffic through the Suez Canal in the last two months. The Houthi rebels have claimed that they are attacking Israeli-linked shipping in support of Palestinians in Gaza.
Georgieva has also warned that if the conflict spreads to other regions, the consequences could be even more problematic for the world economy. World Bank President Ajay Banga also highlighted the challenges posed by Gaza, Ukraine, and the Red Sea to the global economic outlook. The current situation in the region is further hampering the already sluggish growth of the last 55 years, which is a cause for concern. The IMF and World Bank are calling for immediate action to avoid the situation’s escalation and prevent further economic uncertainty.

Nowshin Ahmed
Department of Marketing and International Business
North South University

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