IMF Warning: Economic Growth in the Middle East in 2023 Was Below Expectations

On Sunday, February 11, the International Monetary Fund announced that the economic growth of Middle Eastern countries was lower than expected due to reduced oil production and the war in Gaza. Kristalina Georgieva, the Managing Director of the IMF, stated at the 'Arab Financial Forum' in Dubai that despite uncertainties, 'the global economy has been surprisingly dynamic.' She also warned about the potential impact of ongoing tensions in Gaza on the regional economy. The IMF reduced its GDP growth forecast for the Middle East and North Africa in 2024 to 2.9%, partly due to short-term oil production declines and the war in Gaza, which is lower than the forecasts in the Fund's October report last year. The IMF also updated its growth data for the United States and China, raising its global economic growth forecast and noting a faster-than-expected decrease in inflation. Georgieva mentioned that the economies of Israel and the Palestinians have suffered from reduced tourism revenues, and Houthi attacks from Yemen on shipping lines in the Red Sea have impacted global transportation costs. She stated that these factors have 'intensified the challenges for economies still grappling with previous economic shocks.' The Iranian-backed Houthis began drone and missile attacks on commercial ships in the Red Sea on November 19, claiming solidarity with Hamas. The United States and its allies have labeled the Houthi attacks as a threat to global trade and have conducted airstrikes against Houthi positions in Yemen following repeated warnings. Georgieva announced that the IMF would publish a paper on Monday, February 12, showing that the gradual removal of energy subsidies could save $336 billion in the Middle East, equivalent to the combined economies of Iraq and Libya. She stated that the removal of fossil fuel subsidies would also 'reduce pollution and help improve social budgets.' The IMF reported that in the Middle East and North Africa, fossil fuel subsidies constituted 19% of GDP in 2022. The global fund has recommended the gradual removal of fossil fuel energy subsidies for regional economies, including oil exporters, and emphasized targeted support for these economies to find alternative energy sources. Advanced technology, including artificial intelligence, is one of the main topics at this forum, where several senior executives from major global technology companies, including Sam Altman, CEO of OpenAI, will speak. Georgieva noted that globally, 40% of jobs are affected by artificial intelligence, and countries lacking infrastructure and skilled labor for investment in this area may fall behind. Regional economies like the UAE and Saudi Arabia have significantly increased investment in artificial intelligence as part of their revenue diversification strategies.