The International Monetary Fund (IMF) has warned that Gaza, Lebanon, and Sudan will require decades to recover from the ongoing conflicts ravaging their territories. This assessment comes after the IMF downgraded its growth forecast for the region.
Israel's military operations against Hamas in Gaza and Hezbollah in Lebanon, along with Sudan's civil war, are expected to have long-lasting consequences, according to the IMF. "The damage caused by these conflicts will leave lasting scars at their epicentres for decades," the global lender stated in a recent release.
The IMF has reduced its growth projection for the Middle East and North Africa to 2.1 percent for 2024, a decrease of 0.6 percent attributed to the wars and reduced oil production. The lender anticipates growth to rebound to 4.0 percent in the following year, as outlined in its Regional Economic Outlook report compiled in September.
"This year has been challenging with conflicts causing devastating human suffering and lasting economic damage," remarked Jihad Azour, Director of the IMF's Middle East and Central Asia Department, during a briefing in Dubai. He highlighted the recent escalation in Lebanon, which has significantly heightened uncertainty across the MENA region.
Forecasts for Lebanon, where tensions with Israel have escalated sharply this month, have been temporarily suspended by the IMF. However, conservative estimates suggest a contraction of 9.0-10 percent for the country this year, according to Azour.
The IMF also noted that Saudi-led oil cuts through the OPEC+ cartel, intended to bolster prices, are contributing to sluggish near-term growth in many economies. For the region's oil exporters, "medium-term growth is projected to moderate, as economic diversification reforms will take time to yield results," the report added.
Downside risks remain prevalent, including fluctuating commodity prices, ongoing conflicts, and climate-related shocks, the IMF cautioned.
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